COURT FILE NO.: CV-17-3356-00ES DATE: 2023 07 13
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Brian Blanks W. Jackson, for the Applicant Applicant
- and -
Carol Elizabeth Roberts Self-Represented Respondent
HEARD: In Writing
REASONS FOR JUDGMENT
LEMAY J.
[1] This is the matter of the Estate of the late Terrence Blanks. He passed away in 2011, more than a decade ago. I have been case-managing this matter since October of 2018. As I indicated when I started the case management process, the estate is a relatively simple one that consisted of a house at 7382 Redstone Road in Mississauga (“the Redstone property”), a Rolex watch and a ring. At the outset, there may also have been some small sums of money in a bank account, but this was the extent of the assets. By the time the matter came before me, the house had been sold.
[2] The matter has been made unduly complicated for reasons which I will explain shortly. As a result, there have been numerous case conferences, written submissions, and hearings in this matter before me. There was also a trial of a series of issues before Kumaranayake J. The costs of that proceeding have been addressed separately by Her Honour.
[3] I am now required to fix the costs of all of the appearances before me, as well as the costs of previous appearances before Bloom J. and Shaw J. I had a final case conference with the parties on June 26th, 2023. At that time, I advised the parties that an interim distribution would be ordered once the costs decision is complete. I will provide directions on the release of those funds at the end of these reasons. I do not anticipate that there will be any further in-person appearances in this matter, although I do remain seized to deal with all outstanding issues.
Background
a) The Events Prior to the October 2018 Hearing
[4] The background to this case is spelled out in detail in my decisions of December 21st, 2018 (Blanks v. Roberts, 2018 ONSC 7699), March 4th, 2019 (Blanks v. Roberts, 2019 ONSC 1446) and November 30th, 2020 (Blanks v. Roberts, 2020 ONSC 7133). I directed that a trial of a series of issues take place. It was heard by Kumaranayake J., and unreported reasons were released on June 30th, 2022.
[5] I do not intend to repeat the entire history of the action here. Instead, I will set out a chronology of the relevant events to assist in understanding the reasons for my decisions. I should also note that I will refer to the Applicant, Brian Blanks, as the Applicant, and the Respondent, Carol Roberts, as the Respondent. I will refer to the deceased as either the deceased or the late Mr. Terrence Blanks.
[6] The late Mr. Terrence Blanks died on July 30th, 2011. He had a will dated April 7th, 2008, that everyone accepted was valid. It left the bulk of his estate to his two children, the Applicant and the Respondent. There was a small bequest of $30,000.00 for each of his grandchildren, Kevin Blanks and Amber Roberts.
[7] At the time of Terrence Blanks’ death, the Redstone property was a mess. He was, in the words of Kumaranayake J., “a hoarder”. The Respondent had moved into the Redstone property shortly after Terrence Blanks had died. It was the Applicant’s’ suggestion that she do so.
[8] The Respondent took the lead on cleaning out the Redstone property. There is no doubt that it was an onerous task to clear out the house and get it ready to be sold. However, as Kumaranayake J. noted in her decision, “the time taken to get the home ready to be listed was extraordinary”. The Redstone property was not sold for five years after Mr. Terrence Blanks’ death.
[9] The Redstone property was sold over the Victoria Day weekend in 2016. Four bids were received, and the sale price was $601,000. This price was approximately $20,000 over the asking price, and more than $100,000 over the price that was being used by the Estate’s accountant to value the home. The Respondent raised concerns about the sale at the time it took place, but ultimately signed the paperwork to complete the sale.
[10] The monies from the sale were paid into the trust account of Jerald Mackenzie. Approximately a year later, the Applicant brought an application for directions from the court in respect of the Rolex watch and the ring. The ring was an anniversary ring, and I understand that it had sentimental value to both of the parties. I also understand that there was substantial value to the Rolex.
[11] In the time period between the sale of the Redstone property and the Applicant commencing this action, the relationship between the Applicant and the Respondent deteriorated. There were offers to settle the matter that I will return to below, but the matter was not resolved.
[12] In response to the Applicant’s application, the Respondent challenged the sale of the Redstone property, primarily on the grounds of fraud. The matter came before Shaw J. in September of 2017 on a regular motions list. She adjourned it to be heard at a long motion. Shaw J. did not make any substantive rulings in the matter, although she did expunge settlement discussions from the Respondent’s materials.
[13] The long motion was scheduled before Bloom J. on May 9th, 2018 for a half day. Bloom J. determined that the Application would require four days to be heard, and adjourned it to be heard commencing October 30th, 2018. Again, Bloom J. did not make any substantive rulings in the matter.
b) The Events Between the October 2018 Hearing and the January 2021 trial
[14] Ultimately, the Application was scheduled before me for four days beginning on October 30th, 2018. At that time, I identified the outstanding issues and addressed two of them. The argument before me took portions of two days.
[15] In the October 2018 hearing, the Respondent was seeking an order to, at a minimum, conduct an investigation into the sale of the Redstone property as well as an order striking out portions of the Applicant’s Affidavit. I addressed those issues in my reasons released December 21st, 2018.
[16] I pause to note that the Respondent’s arguments about the sale of the Redstone property were:
a) that she was pressured into selling the Redstone property; b) that the sale was improvident; c) that there was fraud on the part of a number of people (including the Applicant) in the sale of the house; and d) that money from the sale of the house was improperly used to fund a number of development projects in Ontario.
[17] I rejected all of these arguments and, importantly for the purposes of costs, found (at para. 94) that “the evidence presented by Ms. Roberts does not provide any factual foundation for her claims of fraud or potential fraud.” I also dismissed the Respondent’s objections to the Applicant’s Affidavit as unfounded with one minor exception, discussed at paragraph 19 below.
[18] I should note that, shortly before I released my decision on December 21st, 2018, the Respondent provided me with additional submissions and information in which she alleged that the transactions in respect of the Redstone property that she claimed were fraudulent and/or suspicious were related to the dissolution of her marriage and family law litigation that had been going on since 2012. I rejected those claims as well.
[19] The one claim that was allowed was a paragraph that dealt with the Respondent’s position on monies received from the late Terrence Blanks. That paragraph was struck from the Applicant’s Affidavit. It was, as noted by counsel for the Applicant, a pyrrhic victory. The very fact that was struck from the Affidavit was later acknowledged in the Respondent’s reply particulars served a few months after my decision.
[20] After resolving these matters, I proceeded to define the issues in dispute between the parties. On March 4th, 2019, I provided the parties with further directions. Those directions included directions in respect of disposing of the chattels. The procedure adopted was to permit each party to provide a sealed bid for any item that they wanted. The party who had the highest bid would receive the ring or Rolex watch, and would have that amount deducted from their share of the Estate. This procedure was carried out, and the chattels were divided by way of a sealed bid auction, with the Applicant receiving the anniversary ring and the Respondent receiving the Rolex.
[21] One of the issues that remained outstanding was the involvement of Mr. Jerald Mackenzie in this matter. The Respondent disputed Mr. Mackenzie’s account, and raised allegations of misconduct against Mr. Mackenzie. Those allegations were discussed on March 4th, 2019. Finally, on March 4th, 2019, I confirmed with the parties what other outstanding issues there were and provided the parties with directions for preparing for the trial of the issues in this case. Those directions included a deadline for completion of disclosure and for other issues.
[22] A further appearance was held on April 15th, 2019 (see Blanks v. Roberts, 2019 ONSC 2391). During that appearance, I reminded the parties that the timelines in my March 4th, 2019 endorsement continued to apply. Neither party told me that they were having any problems complying with my deadlines or that there were any other outstanding issues.
[23] The matter of Mr. Mackenzie’s account was also discussed at both the April 15th, 2019 appearance and the May 13th, 2019 appearance. The resolution of the matter relating to Mr. MacKenzie was as follows:
a) Mr. MacKenzie waived any account that he had outstanding as against the Estate; b) To the extent that the Respondent wished to seek an accounting and/or other relief from Mr. MacKenzie, she would do so outside the estate.
[24] In other words, there was no claim being made by Mr. MacKenzie against the Estate and there would be no claim that the Estate could make against Mr. MacKenzie. This fully resolved any issues relating to Mr. MacKenzie in the Estate proceeding.
[25] The fact that the Respondent may have obtained some relief in respect of disclosure against Mr. Mackenzie in a separate proceeding does not mean that she had any success in this proceeding as against the Applicant. In addition, I viewed the entire issue of Mr. Mackenzie’s account as a distraction, and I was concerned that the value of Mr. Mackenzie’s account would have been consumed by the costs to the Estate of pursuing any relief against him.
[26] At the May 13th, 2019 hearing, I also gave the Respondent until the end of June 2019 to respond to the particulars that she had received. The Respondent did not ask for any other extensions to any other deadlines, and the counsel that was assisting her on May 13th, 2019 did not ask for any extensions on her behalf.
[27] A further case conference was held on August 7th, 2019. At that time, as I set out in my endorsement, “both sides confirmed that there were no further procedural issues to be addressed….” I released an endorsement on October 15th, 2019 confirming that the issues listed in my March 4th, 2019 endorsement would proceed to trial on the blitz list for May of 2020. I also directed a further case conference, which was ultimately scheduled for February 25th, 2020. Finally, the trial of the issues was to be heard as part of the May 2020 blitz trial sittings.
[28] At the February 25th, 2020 case conference, the Respondent raised three issues for the first time, as follows:
a) A Notice to Creditors that the Respondent proposed be sent on behalf of the Estate: b) Additional “late disclosure” that the Respondent wanted to rely upon. c) Issues relating to the T-1097 provided to the estate at some point in the administration of the Estate.
[29] I provided the parties with further directions to resolve all of these issues. In particular, with the Applicant’s consent, I directed the publication of a Notice to Creditors, even though we were well beyond the limitation period for any claims to be made as set out in the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.
[30] One of the issues that was raised was the Respondent’s desire to provide additional documentation. I set a deadline for the production of those documents from the Respondent that would have allowed for the trial to proceed in May of 2020. However, the COVID-19 pandemic intervened and we were faced with a shutdown of the Courts. The matter languished between March and September of 2020. I issued an endorsement dated September 28th, 2020, indicating that the courts had resumed operation and that the Respondent’s new documents were due by October 19th, 2020.
[31] The Respondent provided additional documents and submissions to me. In her submissions, the Respondent sought to rely on a whole series of additional documents in the litigation of this matter. The Respondent also sought to re-open the issue of the sale of the Redstone property. Finally, the Respondent sought the production of additional documents from the Applicant. This request was made in spite of the fact that disclosure issues were supposed to have been addressed by the end of June 2019. The Respondent also raised issues with the Notice to Creditors.
[32] In my reasons dated November 30th, 2020, I dismissed all of the Respondent’s requests for relief, with the exception of one small request in respect of the promissory notes that the Applicant had with the Estate. For the purposes of this costs order, one of the significant findings in my decision is my ruling that the Respondent raised the issues of disclosure and the Redstone property for the purpose of delaying this matter. I would also note that the Respondent once again raised allegations of fraud on the part of the Applicant. I will set out those allegations in more detail below.
[33] My concerns that the Respondent was trying to delay this matter were heightened by the sequence of events that followed. I directed the parties to appear before me on December 17th, 2020. At that time, the Respondent requested an adjournment. Mr. Jackson, on behalf of the Applicant, was prepared to agree to an adjournment if there were terms including an interim disbursement. The Respondent withdrew her adjournment request.
[34] On January 8th, 2021, the Respondent provided a medical note from Dr. Karen Leung, a “general practitioner practising [sic] in psychotherapy.” The note was dated December 14th, 2020, and stated that the Respondent “is suffering from symptoms and requires 4 weeks to rest, followed by 4 weeks of trial preparation with the assistance of legal support services for documentation preparation.” In spite of the fact that this note had already been prepared by the time of the appearance on December 17th, 2020, this note was not raised with either myself or Mr. Jackson until January 8th, 2021. I dismissed the Respondent’s request for an adjournment, and gave her the right to raise the issue with the trial judge at the outset of trial. At this point, I will note that I viewed the late disclosure of this note as an attempt by the Respondent to obtain an adjournment without agreeing to an interim distribution.
[35] The trial proceeded starting the week of January 11th, 2021.
c) The Proceedings After Trial
[36] On June 30th, 2022, Kumaranayake J. issued her reasons for decision. On July 5th, 2022, I issued an endorsement outlining the steps that had to be taken in order to finalize this Estate. I indicated that the issues that I was expecting to deal with were “administrative” issues, as all of the substantive issues had been resolved. The steps that were necessary to resolve the matters included having the taxes of the Estate completed and making the necessary adjustments to the Estate.
[37] At the appearance on October 12th, 2022, the Respondent argued that she wanted to have a credit report pulled for the Estate of Terrence Blanks. I viewed this as an unnecessary step, but Mr. Jackson (on behalf of the Applicant) was prepared to consent to this report as long as it was at the Respondent’s cost. I understand from the Applicant’s costs submissions that this report was never obtained by the Respondent.
[38] Between October 12th, 2022 and March 28th, 2023, I provided further directions that resulted in the appointment of an accountant for the Estate as well as the completion of the tax returns. I was required to order the Respondent to sign the tax returns for the Estate, and the Applicant was required to threaten her with contempt in order to obtain compliance.
[39] There was then a further hearing on March 28th, 2023. The endorsement from that hearing is reported as Blanks v. Roberts, 2023 ONSC 2157. At that time, I dealt with a number of administrative concerns and set the dates for these costs submissions. The one substantive issue that was discussed on March 28th, 2023 was the Respondent’s position that there were mistakes that needed to be corrected in the various judgments that had been given.
[40] The Respondent identified the issues as being the title to the Redstone Property, the question of whether all of the late Mr. Terrence Blanks’ creditors had been identified and whether the tax returns had been properly completed. All of these issues had been previously resolved. I determined that the Respondent’s attempts to relitigate these issues were an abuse of process. I also determined (at para. 27) that the Respondent was raising these issues to “delay the final administration of the Estate.”
[41] I had a further case management hearing with the parties on June 26th, 2023. At that time, I advised the parties that it was my understanding that unsubstantiated allegations of fraud could result in an award of substantial indemnity costs. The Respondent seemed to disagree with that position. As a result, I permitted her to provide additional submissions on that narrow point. I advised counsel for the Applicant that I would only call upon him to respond if, after reviewing the submissions, I deemed it necessary. Given my disposition of the fraud issue, it is not necessary for me to receive additional submissions from the Applicant.
[42] With that background in mind, I now turn to the positions of the parties.
The Positions of the Parties
[43] The Applicant is seeking costs for the case management process and the proceedings before me on a full indemnity basis in the sum of $116,293.15, inclusive of HST and disbursements. These costs are sought on the following grounds:
a) Most, if not all, of the litigation in this case was not necessary to estate administration. As a result, the costs should be borne by the losing party. b) The Applicant was more successful than his pre-litigation offers to settle this matter and, as a result, should be entitled to substantial indemnity costs. c) In the alternative, the Respondent’s conduct is sanctionable and she should pay either full or substantial indemnity costs on the basis of her conduct. d) In any event, the amounts claimed by the Applicant are entirely reasonable.
[44] The Respondent argues that she should be entitled to her costs of between approximately $55,000.00 and $81,000.00 for the following reasons:
a) The Respondent was successful in many of the positions that she took in this litigation. b) The Respondent’s requests, even when unsuccessful, were both reasonable and necessary for the administration of the Estate. c) Self-represented litigants have been awarded costs, and are entitled to costs in some circumstances. d) That many of the delays in this case were not the fault of the Respondent.
[45] The Respondent also argues that the costs should be paid out of the Estate as the claims she advanced were necessary for the proper administration of the Estate.
Issues
[46] The issues that have to be determined in this case are:
a) Which party should be entitled to costs in this case? b) Whether the costs should be the responsibility of the losing party or be charged to the Estate. c) What should the scale of costs be? d) What should the quantum of the costs be?
[47] I will deal with each issue in turn.
Issue #1- Which Party Should be Entitled to Costs?
[48] The parties both accept that costs are a discretionary matter. However, costs generally follow the event or events. I see no reason to deviate from that general practice in this case. To start my analysis, I must first determine which party was successful.
[49] The Respondent has provided a list of the occasions when she was “successful”. A review of some of the occasions will demonstrate that the Respondent was not actually successful in anything of substance in the case management portion of this case. In my view, the Applicant was almost entirely successful in the case management portion of the litigation and should be entitled to his costs for the entirety of the case management process.
[50] I start with the Respondent’s claims that she was successful in respect of her litigation over the account of Mr. Jerald Mackenzie. There are three problems with this assertion:
a) I made no substantive orders in respect of Mr. Mackenzie’s account. Instead, he was prepared to waive the account. In my view, the value of the account ($5,000) was not worth the energy, effort and legal fees that would have been spent on litigating the matter. b) The position that the Respondent wanted to take was, in essence, a claim that Mr. Mackenzie had acted improperly. Had the Estate advanced that claim, and been unsuccessful, there would have been the risk of significant costs sanctions against the Estate. c) The Order of Chalmers J. that the Respondent refers to as being part of her success was obtained outside of this litigation. It is not a factor in determining whether the Respondent was successful.
[51] Then, I turn to the Notice to Creditors. The Respondent asserts that she was successful in obtaining court Orders to investigate the creditors. The Respondent was only “successful” because Mr. Jackson, on behalf of the Applicant, was prepared to consent to these Orders. The limitation periods in this case would have precluded any claim by creditors against the Estate by the time the Respondent raised this issue. I would have denied her requests if they had not been consented to. This is not “success”. It is the Applicant bending over backwards to try to make the litigation less controversial and difficult, and to move the matter along.
[52] Next, I turn to the Respondent’s claim that she was able to have a small excerpt removed from the Applicant’s Affidavit. This is also not success for two reasons. First, I rejected the vast majority of the Respondent’s requests to have items removed from the Applicant’s Affidavit. Second, as the Applicant correctly points out in his submissions, even this victory was a pyrrhic victory as the Respondent was required to disclose the expunged fact some months later in her particulars.
[53] The final example comes from the proceeding on March 28th, 2023. In her submissions, the Respondent states:
The Respondent notified the court of errors in the tax returns and endorsements and requested corrections. She was partially successful in that the Court corrected the name Robert Maxwell to Brian Maxwell in previous endorsements and provided a signed copy of LeMay J’s October 12, 2022 endorsement.
[54] The Respondent’s claim of partial success is founded on me correcting some typographical errors in my decision. The vast majority of the time and energy at the hearing on March 28th, 2023 was spent in dealing with the Respondent’s entirely unsuccessful requests to relitigate the sale of the Redstone property and the Notice to Creditors, including raising, for the first time, constitutional and Aboriginal title issues in respect of the Redstone property. The Respondent was not successful at the appearance on March 28th 2023.
[55] Where success is substantially divided between the parties, the court will often not make an order as to costs: see Lowndes v. Summit Ford Sales Ltd., 2006 ONCA 446, 48 C.C.E.L. (3d) 194, at para. 3. However, the key word is “substantially divided”. In this case, the Respondent may have obtained a couple of minor pieces of procedural relief. However, on the substantive issues, the Applicant was almost entirely successful. The anniversary ring and the Rolex were sold pursuant to his request for directions, the Respondent’s innumerable requests to have the sale of the house investigated were dismissed, the account of Mr. Mackenzie was hived off and dealt with in a separate proceeding rather than being addressed in this case as the Respondent originally requested, and the notices to creditors were only allowed to the extent that the Applicant consented to them.
[56] In short, the Respondent was entirely unsuccessful on every substantive issue that she raised during case management. She was also unsuccessful on most of the procedural issues in this case during case management. Success was not substantially divided. The Applicant had almost all of the success in this case, and he should be entitled to his costs.
Issue #2- Should the Estate Pay the Costs?
[57] No.
[58] I acknowledge that there is caselaw supporting the payment of costs by the Estate in certain circumstances. The Respondent cites a passage from McGrath v. Joy, 2022 ONCA 119. The complete passage reads as follows:
[91] Traditionally in estate litigation, the parties’ costs were paid from the testator’s estate. In McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 (Ont. C.A.), at paras. 78-79, this court explained the public policy considerations that underlay the traditional approach: the need to give effect to valid wills that reflect the intention of competent testators and the need to ensure that estates are properly administered. Accordingly, if there are reasonable grounds on which to question the execution of a will or the testator’s capacity to make the will, it is in the public interest that such questions be resolved without cost to those questioning the will’s validity. And, where the difficulties or ambiguities that gave rise to the litigation are caused by the testator, it is again appropriate for the testator’s estate to bear the costs of their resolution.
[92] Over time, it became apparent that the courts had to guard against allowing their processes to be used to unnecessarily deplete a testator’s estate and a modern approach emerged. At para. 80 of McDougald Estate, this court summarized the modern approach that courts of first instance are to take in fixing costs in estate litigation:
[C]arefully scrutinize the litigation and, unless the court finds that one or more of the public policy considerations set out above applies, to follow the costs rules that apply in civil litigation. [Emphasis added.]
[59] See also Sawdon Estate v. Sawdon, 2014 ONCA 101, 119 O.R. (3d) 81, at para. 84. This process requires me to engage in a two-step process in considering costs. First, I consider whether there are any policy-related reasons to have the Estate pay the costs. If there aren’t any policy-related reasons, then the usual costs rules apply.
[60] A review of McGrath shows that the policy reasons are generally related to litigation over testamentary capacity or the execution of the will. As Ryan Bell J. noted in Viertelhausen v. Viertelhausen, 2020 ONSC 7890, at para. 26:
[26] In Sawdon Estate v. Sawdon, 2014 ONCA 101, the Court of Appeal recognized that the availability of a blended costs order in estates litigation gives the court the ability to both respect the public policy considerations involved and maintain the discipline imposed by the “loser pays” principle: Sawdon Estate, at para. 97. The public policy considerations are primarily: (i) the need to give effect to valid wills that reflect the intention of competent testators; and (ii) the need to ensure that estates are properly administered: Sawdon Estate, at paras. 84-85. Neither public policy consideration is engaged in this case.
[61] In this case, I am also of the view that neither of the primary public policy considerations are engaged. I start with the testamentary capacity of the testator. That was never an issue in this case. Similarly, almost none of the steps that the Respondent took were taken to ensure that the Estate was properly administered. As a result, costs should not be paid from the Estate.
[62] At paragraph 29 of her submissions, the Respondent states that “[t]he Respondent’s requests as a beneficiary and estate trustee were reasonable.” I disagree. In this respect, I start by noting that I dismissed much of the relief that the Respondent was seeking at the March 28th, 2023 hearing on the basis that it was an abuse of process. As far back as my decision on November 30th, 2020, I found that the Respondent’s position in respect of the Redstone property amounted to an abuse of process (see para. 78).
[63] In her reply submissions, the Respondent stated that it was her right and duty as an Estate Trustee to advance the issues that she advanced. It may have been her right to raise these issues, but she was not obligated to do so. I note as follows:
a) With respect to the Redstone property, the Respondent raised issues that were irrelevant to the disposition of the Estate and did so without any factual foundation to support her positions. b) With respect to the creditors of the Estate of the late Mr. Terrence Blanks, the Respondent was advised on multiple occasions that any claims were beyond the limitation period under the Limitations Act, 2002. In spite of this information from the court, the Respondent continued to pursue these issues. c) With respect to both issues, the Respondent raised them over and over again, to the point where I found on multiple occasions that her continued advancement of these positions amounted to an abuse of process.
[64] I return to one of my previous observations about this case. It is a simple Estate that should have been resolved more than five years ago. The Applicant’s Application to the court to address the anniversary ring and the Rolex was necessary because the parties could not agree on how to manage those assets. Had that been the only issue dealt with by the court, then the payment of costs from the Estate might have been justified because those were issues not dealt with by the testator that had to be resolved in order to properly administer the will. Addressing those items would have required very little time and effort. That is not what happened. Instead, a whole series of additional issues were raised by the Respondent
[65] The Respondent’s positions in response to the Applicant’s Application were unnecessary. After the Redstone property was sold, the parties should have simply agreed to either split the funds or proceed to trial on the issues that were heard by Kumaranayake J. The Respondent should not have sought all of the additional documents and information she sought, and she should not have attempted to unwind and/or otherwise challenge the sale of the Redstone property.
[66] I make no comment on either who should pay the costs of the trial or whether they should be borne by the Estate. That is Kumaranayake J.’s decision. On the issues that had to be determined by me, the costs should be paid by the unsuccessful litigant, the Respondent.
Issue #3- What Should the Scale of Costs Be?
[67] Normally, costs are awarded on a partial indemnity basis. An award of substantial indemnity costs will only be awarded either where a party has achieved a result that is better than their offer to settle, or where a party has engaged in conduct of an egregious or reprehensible nature. The Applicant argues that both apply in this case.
[68] I will deal with each issue in turn.
a) Offers to Settle
[69] The following offers to settle were provided by the Applicant:
a) An offer dated September 2nd, 2015, which offered to settle the matter for the sum of $199,500 plus the Rolex watch. This is a pre-litigation offer. b) Proposed minutes of settlement dated November 29th, 2016. This proposal gave the Respondent both the Rolex watch and the ring. It also resulted in the forgiveness of debts on behalf of both the Applicant and the Respondent.
[70] The following offers to settle were provided by the Respondent:
a) An offer to settle dated January 13th, 2017. It would have forgiven the monies owing by each side and split the cash equally. The Respondent would have been entitled to the Rolex watch and the anniversary ring over and above the equal division of the cash in the estate. The difference in this offer was in the fact that there was a specific holdback, and in the fact that the Estate was required to pay Mr. Mackenzie’s bill. b) An offer to settle dated December 15th, 2020. This offer would have resulted in the payout of approximately 75 percent of the funds being held in court. It would also have resulted in the parties receiving the chattels that they had been awarded by the sealed bid process, but at no monetary value. However, there was also a requirement in this offer for “full and frank disclosure”, which would have had the result of reopening all of the affairs of the Estate, including the sale of the Redstone property.
[71] The first question to consider is whether either side did better than their offers to settle at trial. I start with the Respondent’s offers to settle. The offer to settle dated December 15th, 2020 is nothing more than an attempt to re-litigate the issues around the ownership of the Redstone property and further delay this matter. Accepting this offer would have required the Applicant to agree to unwind all of the work that had been done to that point.
[72] This brings me to the offers that both sides exchanged between November of 2016 and January of 2017. These offers are quite close to each other in their terms. The litigation should have resolved at that point. However, the question is whether either party achieved a result that was better than their offers to settle. In my view, before costs are considered, the Applicant did succeed in obtaining a result that was slightly better than what he offered before the start of the litigation. Notwithstanding that conclusion, it is difficult to parse out the differences between the offers in November of 2016 and January of 2017.
[73] For the issues I have to determine, it is not necessary to parse out the differences between these offers. That is because these offers are pre-litigation offers to settle, as the Application was not brought until later in 2017. Caselaw has made it clear that, to trigger cost consequences under Rule 49, there must be an ongoing action. The language of Rule 49 clearly speaks to a “party to a proceeding” serving an offer. See Scanlon v. Standish, 57 O.R. (3d) 767 (C.A.), at para. 8, and Buccilli v. Pillitteri, 2014 ONCA 337, at paras. 22-24. Since there was no proceeding in January of 2017, there can be no offer that triggers Rule 49.
[74] In the end, this matter should have resolved quickly once the issues of the Rolex and the anniversary ring were resolved. The only issues that should have been left were the issues that were tried before Kumaranayake J. The fact that the litigation took so long to resolve brings me to the conduct of the Respondent.
b) Conduct of the Respondent
[75] Costs can also be awarded on a substantial indemnity basis where the conduct of a party is worthy of sanction. The Court of Appeal has explained this principle in detail in Davies v. Clarington (Municipality) et. Al, 2009 ONCA 722, 100 O.R. (3d) 66, at paras. 28-31 as follows:
[28] The first issue is whether the trial judge erred in relying on the February 2005 offer as justification for an elevated costs award. This court, following the principle established by the Supreme Court, has repeatedly said that elevated costs are warranted in only two circumstances. The first involves the operation of an offer to settle under rule 49.10, where substantial indemnity costs are explicitly authorized. The second is where the losing party has engaged in behaviour worthy of sanction.
[29] In Young v. Young, [1993] 4 S.C.R. 3, [1993] S.C.J. No. 112, at p. 134 S.C.R., McLachlin J. described the circumstances when elevated costs are warranted as "only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties".
[30] The same principle was expanded upon in Mortimer v. Cameron (1994), 17 O.R. (3d) 1, [1994] O.J. No. 277 (C.A.), at p. 23 O.R., where Robins J.A., speaking for the court, set out the restricted circumstances in which a higher costs scale is appropriate with reference to Orkin, at para. 219. [page75 ] An award of costs on the solicitor-and-client scale, it has been said, is ordered only in rare and exceptional cases to mark the court's disapproval of the conduct of a party in the litigation. The principle guiding the decision to award solicitor-and-client costs has been enunciated thus:
[S]olicitor-and-client costs should not be awarded unless there is some form of reprehensible conduct, either in the circumstances giving rise to the cause of action, or in the proceedings, which makes such costs desirable as a form of chastisement.
[31] The narrow grounds justifying a higher costs scale were further reinforced by Abella J.A. in McBride Metal Fabricating Corp. v. H. & W. Sales Co. (2002), 59 O.R. (3d) 97, [2002] O.J. No. 1536 (C.A.) where, at para. 39, she said: Apart from the operation of rule 49.10 (introduced to promote settlement offers), only conduct of a reprehensible nature has been held to give rise to an award of solicitor and client costs. In the cases in which they were awarded there were specific acts or a series of acts that clearly indicated an abuse of process, thus warranting costs as a form of chastisement. See, also, Walker v. Ritchie, [2005] O.J. No. 1600, 197 O.A.C. 81 (C.A.), at para. 105, vard 2006 SCC 45, [2006] 2 S.C.R. 428, [2006] S.C.J. No. 45. [Footnote omitted.]
[76] Substantial indemnity costs are very much the exception. They should only be awarded in rare and exceptional circumstances. They are an expression of the court’s disapproval of a party’s litigation conduct: Hunt v. TD Securities Inc., 66 O.R. (3d) 481 (C.A.), at para. 123.
[77] Even where a party unsuccessfully advances an allegation of fraud or dishonesty, substantial indemnity costs do not automatically follow: see Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 26. However, there is a difference between hard fought litigation that turns out to be misguided, and malicious and counter-productive conduct. The former will not attract substantial indemnity costs; the latter may very well attract them: Davies, at para. 45. Similarly, substantial indemnity costs can be awarded where one party to the litigation behaves in an abusive manner, brings meritless proceedings, and runs up the costs: see Rousseau v. Scotia Mortgage Corp. et. al., 2013 ONSC 677, at para. 23.
[78] With these principles in mind, I now turn to the facts of this case. In her own submissions, the Respondent makes the following observation:
- Delays caused by the Respondent, a self-represented non-legal professional with an invisible disability, should not be penalized. She did her best to seek assistance and to understand the law and was within her legal rights to seek accommodation and to be provided same, including extensions of time.
- The Respondent’s accommodations, such as extensions of time and transcripts, provided by the court benefited the Applicant, who has not identified as a person with a disability, with same.
- Had the Applicant and JW. MacKenzie provided transparency and disclosure sought by the Respondent, the Respondent would not have needed to seek same, mistakenly sought as an investigation, via the court.
[79] It is important to ensure that self-represented litigants have access to justice and are not prejudiced by the lack of knowledge of court procedures: see Ó Murchú v. Yukon (Government Of), 2020 YKSC 21, at para. 59. In this case, the Respondent was provided with significant accommodations over and above what would have been provided to a represented litigant. I also note the Respondent’s claims of disability. Those have been addressed in other decisions and were managed through various steps that the Court took in the litigation of the matter.
[80] Nevertheless, the Court must still consider the conduct of the Respondent in assessing costs. I start with paragraph 47 of the Respondent's submissions. In my view, the Respondent has mischaracterized what has happened in this case. This was not a case of a lack of disclosure. This was a case where the Respondent alleged that the Applicant was engaged in fraud both on his own account and with others.
[81] In her reply submissions, the Respondent states as follows:
Bullet (3) is denied. The Respondent’s affidavits presented facts, information and her beliefs and concerns. The Applicant provided no evidence he relies upon regarding statement of allegations of fraud against the Applicant and others or losses as a result of her submissions.
[82] There are two problems with this submission. First, it is factually inaccurate. On numerous occasions in this litigation, the Respondent has accused the Applicant of being involved in a fraud in his capacity as an Estate trustee. In order to ensure that I was correct about my recollections in that regard, I went back and reviewed portions of the pre-pandemic paper file as well as previous submissions. There are numerous examples of allegations of fraud being made by the Respondent.
[83] In the original factum filed in 2018, the Respondent states (at para. 1) that “Brian [the Respondent] has conducted himself in an egregious well evidenced pattern of malicious behaviour against the Estate and his sister…”. The factum goes on to list the issues for consideration and then states, at para. 3:
These issues must be considered against the factual background of this Estate wherein Brian's conduct demonstrates conflicts of interest, mishandling. damage and destruction of property. removal and concealment of documents belonging to the Estate and dishonest dealings regarding both real and personal property of the Estate and monies owed by Brian.
[84] In essence, in the first appearance before me, the Respondent argued that the sale of the Redstone property was improper and fraudulent. She pointed to a “web of transactions”, many of which involved the Applicant, and claimed that this web of transactions showed that there had been fraud in the sale of the property. The claims of fraud were advanced against the Applicant and others, including the Respondent’s ex-husband.
[85] In addition, in her Affidavit of October 19th, 2020, the Respondent states (at para. 10):
I believe the reason for the REIT is that Terry provided financial benefits to Brian during his lifetime. I believe he created a separate trust or trusts for tax reasons and to keep things equal. Between 2006 and 2008, Brian was distraught that he could not obtain a mortgage after his acrimonious divorce from Dorothy. Terry asked me about creating a corporation with Terry, me and Brian as equal partners, and putting Brian’s home under the ownership of the corporation. I said to my father I did not want to own a business with Brian. I believe he implemented a different strategy to make sure he was not favouring Brian, and that Brian is withholding information about his financial dealings with my father.
[86] In essence, this is a claim that the Applicant is deliberately withholding information from the Respondent and breaching his obligations as a fiduciary. It is, in my view, virtually the same as an allegation of fraud.
[87] In her submissions of October 19th, 2020, the Respondent seeks production in part because, as she sets out at paragraph 37:
I became convinced the Estate may have been administered improperly due to information withheld from me and that someone was leveraging my share of the Estate, my identity and my assets.
[88] This allegation comes at the end of a lengthy document where the Respondent accuses (again) her ex-husband of giving instructions about the Estate litigation to Mr. Jackson, counsel for the Applicant. In the same submissions, the Respondent also (at para. 16) accuses the Applicant of letting assets that belonged to the late Terrence Blanks bypass the Estate, and of hiding that fact from the Respondent. Again, this is a very serious allegation to make about an Estate Trustee.
[89] In support of her position that substantial indemnity costs should not be awarded against her, the Respondent points to the decision in Abt Estate v. Ryan, 2020 ABCA 133. The Respondent specifically relies upon the following passage:
[60] Strategic Acquisition Corp v Multus Investment Corp, 2017 ABQB 297, paras 25-26, 58 Alta LR (6th) 145, varied, but affirmed as to costs, 2018 ABCA 63, para 20, held that the decisions in Young and Hamilton stood for the proposition that enhanced costs for failure to prove fraud: should be reserved for the most egregious cases where, for example, the court is punishing a litigant for falsifying documents submitted to the court, or intentionally making false allegations of fraud....Where the allegations of fraud have some circumstantial plausibility with some basis on the facts alleged, in general terms, the plaintiff’s conduct cannot then be described as “reprehensible, scandalous or outrageous.”
[90] This case is different from the facts in Abt. There was no merit to any of the Respondent’s allegations of fraud or dishonesty in disclosing Estate assets and I did not see any evidence that supported the Respondent’s allegations. The fact that the Applicant and the Respondent had disagreements as they administered the Estate is no reason to advance these allegations.
[91] I also note that the allegations are very serious, as they were made against the Applicant in his capacity as an Estate Trustee. He has fiduciary obligations to the beneficiaries of the Estate. Making unsubstantiated allegations of fraud against a fiduciary, and then maintaining those allegations to the point where the court finds the conduct an abuse of process, is the type of conduct that ought to attract the disapproval of the court and an accompanying award of substantial indemnity costs.
[92] I also note that there is no requirement that the allegation of fraud cause demonstrable harm. It is sufficient that it is made without foundation and pursued in the litigation. As noted in Viertelhausen, at para. 33:
[33] Unfounded allegations of misconduct and personal attacks on the propriety of an estate trustee can attract an elevated costs award: Morassut v. Jaczynski, 2015 ONSC 502 (Div. Ct.), at paras. 61-62; Cardinal v. Perreault, 2020 ONSC 4825, at para. 38. I found Teresa’s veiled allegation that Bill acted improperly in the administration of his mother’s estate to be “utterly without foundation”, particularly given that Teresa, together with the other beneficiaries, had signed a comprehensive release. In my view, advancing this allegation constituted reprehensible conduct, worthy of the court’s sanction.
[93] It is also worth noting that the allegation can be of misconduct and impropriety rather than just fraud. As noted in Cardinal v. Perreault, 2020 ONSC 4825, at para. 38, “Impugning somebody’s integrity in the absence of a credible evidentiary foundation is reprehensible.” That is exactly what the Respondent has done in this case. She has impugned the Applicant’s integrity in the absence of any evidentiary foundation to support her allegations and has done so when she knew that the Applicant had fiduciary obligations. It is reprehensible conduct that should attract an award of substantial indemnity costs.
[94] My conclusion that substantial indemnity costs are justified in this case is fortified by the facts underlying the sale of the house. Specifically, the Respondent has been alleging that the Redstone property was sold improvidently for $601,000. However, the Applicant states that the Respondent was prepared to buy the Redstone property from the Estate for $431,500 less than a month before it sold for $601,000. The Applicant argues that this demonstrates that the Respondent never had a good faith basis for believing that the Redstone property had been improvidently sold. I agree.
[95] Finally, I want to comment on one of the Respondent’s’ submissions on costs. In paragraph 48 of her original submissions, the Respondent states:
- The Applicant has not been denied reasonable access to his inheritance. The Respondent took the initiative to save time and costs by asking for the Applicant’s request to bring a motion to release funds be heard on the spot. The parties subsequently consented to release $25,000 to the Applicant. If the Applicant had further financial need he did not raise it before the Court.
[96] I cannot reconcile this submission with what has actually happened in this case. I would observe three facts. First, other than with respect to one $25,000 disbursement, the Respondent has opposed, at every turn, the payout of any of the Estate’s money. Therefore, she has denied the Applicant access to his portion of the estate. Second, as discussed elsewhere in these reasons, the Respondents’ conduct in that regard has been unreasonable and she has held up the disbursement of the assets in this case for more than half a decade. Finally, the Respondent continues to oppose the payment of any of the monies currently in court in spite of the fact that the Estate’s liabilities are relatively clear and there is no risk associated with paying the bulk of these monies out. I have overruled those objections, but the fact remains that the Respondent has made and maintained these objections.
[97] For all of these reasons, I am persuaded that the costs should be ordered on a substantial indemnity basis. Given the very limited difference between substantial indemnity and full indemnity costs in this case and my disposition of the quantum of the costs, it is not necessary to consider whether full indemnity costs should be ordered.
Issue #4- What Should the Quantum of the Costs Be?
[98] In assessing the quantum of costs, I am mindful of the factors that are listed in Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. I have already addressed the offers to settle and results of the proceeding. In this case, the most significant of the remaining factors are:
a) The importance of the issues. In this case, the Respondent alleged fraud on the part of the Applicant. As a result, she should have expected these allegations to be vigorously defended. b) The conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding. I have detailed in my reasons my significant concerns with the approach that the Respondent took to this litigation. Her approach unnecessarily lengthened the duration of this proceeding. c) The reasonable expectation of the parties. I will address that issue below.
[99] In her reply submissions, the Respondent states that the Applicant’s claim for costs is nearly 20 percent of the value of the Estate. Although not articulated quite this way, the argument is one of proportionality. As noted in Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291 (C.A.), at para. 24:
[24] The appellants submit that the motions judge accepted the bills of costs that were presented to her without any deductions. The bills were prepared in accordance with the calculation of hours times dollar rates provided by the costs grid. While it is appropriate to do the costs grid calculation, it is also necessary to step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable. This approach was sanctioned by this court in Zesta Engineering Ltd. v. Cloutier, [2002] O.J. No. 4495, 21 C.C.E.L. (3d) 161 (C.A.) at para. 4 where it said: In our view, the costs award should reflect more what the court views as a fair and reasonable amount that should be paid by the unsuccessful parties rather than any exact measure of the actual costs to the successful litigant.
[100] I accept that proportionality and reasonableness are the touchstones in virtually all costs awards. However, in this case, I must also be mindful of the Respondent’s conduct. A party cannot adopt an aggressive and uncompromising approach to litigation, take unreasonable legal and factual positions, run the costs of litigation up, and then rely on proportionality to evade the other side’s costs bill when they inevitably lose. Adopting that approach would be tantamount to supporting reprehensible litigation strategies. The fact that the costs of this proceeding is a significant proportion of the Respondent’s inheritance is her responsibility.
[101] The Respondent also states that “exorbitant costs risks to trustees personally, particularly those who cannot afford fully retained counsel, may chill Trustees from accepting the role.” She cites Sawridge Trust v. Alberta (Public Trustee), 2013 ABCA 226 in support of her position.
[102] I reject the Respondent’s position for two reasons. First, the Sawridge case concerns the appointment of an independent third party litigation representative. In this case, the Respondent is one of the beneficiaries of the Estate, and she is in no way independent. Second, the “chilling effect” that the Respondent discusses is not a concern where a beneficiary of an estate acts in an improper manner. As has been discussed extensively throughout these reasons, I am persuaded that the Respondent took positions in bad faith in this litigation. This improper conduct requires sanction and the most appropriate way to provide that sanction is through an award of substantial indemnity costs.
[103] Second, the Respondent’s claim for costs is between $55,987.05 and $81,207.05. One of the factors that the court considers under Rule 57 when fixing the costs of a proceeding is what the reasonable expectations of the losing party would be. The Respondent is self-represented. She is only claiming a fee for her own time of $100.00 per hour. She has also retained counsel to assist with various matters and has paid at least some of them $350.00 per hour, which is the rate that Mr. Jackson has charged. Given what the Respondent is claiming for her costs, it should be well within her reasonable expectations that she would be expected to pay the same amount, or even more, because of the Applicant’s decision to retain counsel.
[104] That being said, there are two adjustments to the quantum of costs to be paid by the Respondent, as follows:
a) Respondent’s counsel claims four days at eight hours each for the hearing in October of 2018 because it was booked for four days. The fact that a hearing is booked is not, in and of itself, reason to award costs for it. The hearing did not take place for two and a half of those four days and I am sure that Mr. Jackson was able to fill in the time with other activities. As a result, I am reducing the amount of time for this claim by 20 hours. b) There is undoubtedly some duplication between the trial costs and the costs associated with the case management process. In that respect, I note that Mr. Jackson very fairly deducted 30.5 hours that were submitted to the trial judge. My view is that there should be a further deduction to take account of the fact that there were no case management activities at all between January 8th, 2021 and July 5th, 2022. I am reducing the time claimed by a further 35 hours.
[105] When I apply these deductions and consider the facts of the case as a whole, I come to a costs number of $90,000 inclusive of HST and disbursements on a substantial indemnity basis, and I award the Applicant those costs.
Conclusion
[106] For the foregoing reasons, I am ordering as follows:
a) The Respondent is to pay the Applicant’s costs of the case management and motions in this matter in the sum of $90,000.00 inclusive of HST and disbursements. b) The Respondent is personally liable for the costs described in paragraph (a) and the Estate is not liable for any of those costs. c) The Respondent is to pay the Applicant his costs within thirty (30) days of today’s date.
[107] This brings me to the issue of the next steps. I directed that my endorsement of June 26th, 2023 be provided to the accountant, Mr. Maxwell. I have not heard from him. As a result, I am assuming that there are no issues with what I proposed in that endorsement and that is now a Final Order.
[108] The parties are each given seven (7) calendar days to provide my judicial assistant with a copy of their proposed reconciliation of the final funds for the Estate. This document is also to be filed with the Court office. Once I have received those calculations, I will provide the parties with an endorsement setting out what the interim distribution is to be and when it is to take place.
[109] I remain seized of these matters until the Estate is finally wound up.
LEMAY J. Released: July 13th, 2023