COURT FILE NO.: CV-20-00652655-0000 DATE: 2023-07-04

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: LORY ELIZABETH JAMES and LORY ELIZABETH JAMES, as EXECUTOR OF THE ESTATE OF CLARENCE ROY JAMES, Plaintiffs v. ESTATE OF CLARENCE ROY JAMES AKA C. ROY JAMES, JOHN ALVIN JAMES, PERSONALLY AND AS EXECUTOR OF THE ESTATE OF CLARENCE ROY JAMES, JAROC MANAGEMENT SERVICES INC., BANK OF MONTREAL, BMO NESBITT BURNS BMO INVESTORLINE INC., GREGORY A. BRECHIN and BRECHIN & HUFFMAN LLP, Defendants v. JOHN ALVIN JAMES, Plaintiff by Counterclaim v. LORY ELIZABETH JAMES, GLACIER TRADING CORPORATION and JAROC MANAGEMENT SERVICES LTD . , Defendants by Counterclaim

HEARD: In writing BEFORE: Nieckarz A/RSJ

COUNSEL: A. Bloom and M. Saunders, for the Plaintiffs M. Abradjian and A. Dobrogeanu, for John Alvin James

Endorsement On Costs

[1] This Endorsement on Costs relates to:

a. the motion of the Defendant, John James (“John”) to remove the Plaintiff, Lory James (“Lory”) as Estate Trustee of the Estate of Clarence Roy James (the “Estate”), and for an Order for the Appointment of an Estate Trustee During Litigation (“ETDL”), with ancillary relief; and

b. the motion of Lory and the Defendant by Counterclaim, Glacier Trading Corporation (“Glacier”) to strike John’s Counterclaim against Glacier on the basis that the limitation period had expired.

[2] For reasons delivered in James v. James et. al., 2022 ONSC 6349:

a. I did not grant John’s request to remove Lory as Estate Trustee;

b. I granted John’s request to appoint R. Earnshaw at ETDL; and

c. I dismissed Lory/Glacier’s motion to strike the Counterclaim against Glacier.

[3] As part of my decision, I invited submissions as to costs.

[4] John seeks costs of his motion on a substantial indemnity scale in the amount of $16,021.77, and of Lory/Glacier’s motion on a partial indemnity scale in the amount of $8,772.64. John also seeks an additional $1,500 on account of costs for the costs submissions, for a combined award of $26,294.41 to be paid by Lory personally. He argues that he was the successful party, and with respect to his motion, his result was as good as or better than his offer.

[5] Lory’s position is that the costs of both motions should be reserved for the trial judge who will have the benefit of a full evidentiary record. In the alternative, she argues there was mixed success for both parties and that John’s costs claim is not a reasonable amount.

[6] For reasons that follow, Lory shall pay John the sum of $10,000 on account of costs of John’s motion. Lory and Glacier jointly and severally shall pay costs in the amount of $5,500 of the motion to strike. These amounts are inclusive of all fees (including for costs submissions), disbursements and HST.

The Law:

[7] An award of costs is in the discretion of the court by virtue of s. 131(1) of the Courts of Justice Act.

[8] The discretion of the court is to be exercised in light of the facts and circumstances of the case in relation to the factors provided for in Rule 57.01(1) of the Rules of Civil Procedure.

[9] In addition to the outcome and any offers to settle that were made, Rule 57.01(1) provides for consideration of the following factors:

57.01 (1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) 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;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(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,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

[10] A costs award must be fair and reasonable. Reasonableness is the overriding principle. As such, costs awards should not merely be a calculation of the hours spent, but also reflect the reasonable expectations of the parties. An award of costs should seek to balance the indemnity principle with the fundamental objective of access to justice: Boucher v. Public Accountants Council for the Province of Ontario (2004) , 71 O.R. (3d) 291 (C.A.) at paras. 37-38; Andersen v. St. Jude Medical Inc. at para. 22.

[11] On a contested motion, the court shall presumptively fix costs and order them payable within 30 days, unless the court determines that a different order would be more just: Rule 57.03 of the Rules of Civil Procedure.

Analysis:

Should costs be determined now or left to the trial judge?

[12] I agree with Lory’s position that the discretion to award costs includes the discretion to determine whether it is more appropriate to leave costs to a determination by the trial judge. Rule 57.03 is subject to the discretion of the motions judge.

[13] I do not agree that I should exercise my discretion in this case to reserve costs to the trial judge.

[14] Lory argues that the trial judge will have the benefit of a full evidentiary record and:

a. The trial judge will be in the best position to evaluate the parties’ conduct, including the allegations raised by the parties against each other. The trial judge will be in the best position to determine whose conduct, including pre-litigation conduct, necessitated the appointment of the ETDL, including the legal costs on the motion. She argues this is particularly relevant.

b. The facts underlying the motions are intimately tied to the main disputes between Lory and John surrounding the Estate.

c. If Lory is ultimately successful at trial on the limitation argument, it would be reasonable for the trial judge to determine that no costs on her motion is the appropriate award.

d. A failure to award costs at this stage will not impact John’s ability to continue with the litigation.

[15] Regardless of whose conduct necessitated the appointment of the ETDL, it was clear prior to the motion that such appointment was necessary. This recommendation was made at a case conference and discussed in correspondence between counsel both prior to and following that conference. The only issue that should have been argued was the choice of ETDL and potentially terms of the order. The motion was unnecessary and indicative of the lack of trust between John and Lory in that a resolution of this issue could not be reached because neither of them would agree to the other’s choice of ETDL. John was successful and I see no reason not to order costs payable now.

[16] If, as Lory argues, a trial judge concludes that it was John’s conduct alone that necessitated the appointment of the ETDL, a trial judge can determine the appropriate remedy. At this stage, it was evident that the relief was necessary because of Lory and John’s interests that not only conflicted with each other, but the Estate, and the resulting paralysis to the administration of the Estate. Lory assumed a risk in opposing the appointment of ETDL, as opposed to merely the choice of ETDL or terms, and assumed the risk of costs consequences if she was unsuccessful.

[17] I note the words of Brown J. (as he then was) in Salter v. Salter Estate , at para. 6, are applicable:

[6]… Consequently, the general costs rules for civil litigation apply equally to estates litigation – the loser pays, subject to a court’s consideration of all relevant factors under Rule 57, and subject to the limited exceptions described in McDougald Estate . Parties cannot treat the assets of an estate as a kind of ATM bank machine from which withdrawals automatically flow to fund their litigation. The “loser pays” principle brings needed discipline to civil litigation by requiring parties to assess their personal exposure to costs before launching down the road of a lawsuit or a motion. There is no reason why such discipline should be absent from estate litigation. Quite the contrary. Given the charged emotional dynamics of most pieces of estates litigation, an even greater need exists to impose the discipline of the general costs principle of “loser pays” in order to inject some modicum of reasonableness into decisions about whether to litigate estate-related disputes.

Who is the successful party?

[18] With respect to Lory/Glacier’s motion, there is no doubt that John is the successful party. The motion was dismissed. It was dismissed without prejudice to Lory/Glacier to raise the issues at trial. I found that the relief sought was best suited to a trial, based on full argument on the law and a complete evidentiary record, rather than a motion.

[19] With respect to John’s motion, he was not successful in securing the removal of Lory as an estate trustee but was successful in the appointment of an ETDL and the choice of ETDL. He was not successful in achieving all of the terms of the order for appointment of ETDL he sought. Lory argues that success was divided.

[20] While both the removal and appointment of ETDL issues were argued, the latter was clearly the more significant issue for the parties, consuming a greater amount of time at the argument of the motions than any other issue, and John was successful on this issue as to both the appointment and choice of ETDL.

[21] I note that the discussions between counsel prior to the motion focused on the appointment of the ETDL as opposed to removal. The parties could not agree who to appoint. Rather than simply focus on, and argue this issue, the parties chose to argue everything. They both must both bear some responsibility for this and the increased costs. John will bear some responsibility with respect to the quantum of costs.

[22] I find that despite not being the successful party on all issues, John was overall the successful party on his motion. The appointment of the ETDL and choice of ETDL was the issue that seemed most hotly contested.

Is there another reason to make a costs order other than against Lory personally?

[23] Lory argues that the ETDL appointment was not a step in the litigation that required the discipline of the loser pays costs rule and that the nature of that relief places the most in a special category whereby courts often give each party their costs from the estate. She relies on Cabrera v. Coughlan, 2022 ONSC 1087 , at para. 53.

[24] In Cabrera, Kimmel J., citing Salter and McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 (Ont. C.A.), and McGrath v. Joy, 2022 ONCA 119, recognized that there are certain circumstances where public policy considerations permit the costs of all parties to be ordered paid out of the estate. One such situation was where the litigation was reasonably necessary to ensure the proper administration of the estate.

[25] In Cabrera, at para. 53 , Kimmel J., stated:

[53] These ETDL motions fall into the exceptional category of being reasonably necessary to ensure the proper administration of the estate in this case. [emphasis added].

[26] Cabrera is easily distinguishable from this case on its facts. As Kimmel J., noted, the circumstances of the case did not make the appointment of an ETDL an obvious or easy choice. The parties agreed that an ETDL needed to be appointed. The issue argued came down to whether it should be a neutral professional or the estate trustees. The parties narrowed and focused their arguments accordingly. The parties agreed that they would each receive their costs, from the estate, and agreed on the quantum of costs.

[27] In this case, had the parties adopted a similar approach to the true issue, being who should be the ETDL and on what terms, I may have been inclined to accept Lory’s request to order costs payable from the Estate. The approach in Cabrera is not the approach adopted by the parties in this case. As such, I find that the words of Brown J., in Salter are applicable. This is a case that calls out for the discipline of a costs order.

What scale of costs is appropriate?

[28] In that regard, John must bear some responsibility for the choices he has made in this litigation also. He chose to move forward with the removal of Lory as an estate trustee as opposed to simply the appointment of an ETDL. This took the conflict up a notch and increased the stakes for Lory. In choosing to pursue this relief, John took a part in detracting from what the true issue on the motion should have been, which was the choice of ETDL and terms of appointment. His conduct, in my view, does not warrant depriving him of his costs, but it does warrant depriving him of substantial indemnity costs despite earlier attempts at a resolution.

[29] With respect to the June 28th, 2022, proposal from John’s counsel to Lory’s counsel, I agree that this was a very reasonable offer, and had it been made more than one day prior to the hearing of the motion I would have been more inclined to consider it as the basis for a substantial indemnity award of costs. It was made at 3:09 p.m. the day before the motion.

Should costs be payable by Lory and Glacier jointly and severally?

[30] Lory argues that any costs award in favour of John on John’s motion should be borne by Lory and Glacier, jointly and severally. I disagree with respect to John’s motion, as it was Lory’s interests primarily at stake, but agree with respect to Lory/Glacier’s motion to strike. Lory and Glacier were the moving parties. While there were interests of Glacier triggered by John’s motion, Lory appeared to be the party primarily opposing the motion.

Quantum of Costs – Are they reasonable?

[31] Lory argues that the amount claimed with respect to John’s motion is excessive and outside of her reasonable expectations. She notes that prior to the hearing of the motions her counsel submitted a cost outline for $7,940. She argues that even though Lory’s counsel and John’s counsel are nearly equal in terms of years of experience, John’s costs sought are three times those sought on behalf of Lory.

[32] It is difficult to compare the costs outlines of the parties. Lump sum amounts are provided without any detail to assist in understanding the differences.

[33] With respect to both motions and the factors provided for in Rule 57.01 as outlined above:

• The amount in dispute in the overall litigation is approximately $3 million. The Glacier dispute is with respect to an asset of considerable value.
• The legal issues were not overly complex in either motion, although there are some factual complexities that did result in a large volume of materials. With respect to Lory/Glacier’s motion, the factums framed the issues well and the motion was not lengthy in terms of argument or materials filed by John. For the most part, he relied on his materials in the main motion.
• The dismissal of the counterclaim with respect to Glacier is of considerable importance to both parties given the value of this asset. The removal of Lory as an estate trustee was, understandably of importance to Lory, but not something John should have devoted too much resources to given that his concerns were appropriately addressed on an interim basis through the appointment of the ETDL.
• Both parties engaged in conduct that unnecessarily complicated the issues, increased costs and lengthened the proceedings. This resulted in unnecessary steps. As indicated above, with respect to John’s motion the only true issue should have been who the ETDL is, and on what terms with respect to Glacier should they be appointed.
• Counsel for both parties were experienced. On John’s motion, junior counsel and a senior law clerk were also used, which reduced the amount of time senior counsel was required for the file, but I cannot tell whether there was some overlap in effort.

[34] In consideration of these factors and for the reasons set out in this order, I find that a fair and reasonable amount for Lory to pay on account of costs of John’s motion, including costs submissions is $10,000, inclusive of fees, disbursements and HST. With respect to Lory/Glacier’s motion, I find that a fair and reasonable amount is $5,500 inclusive.

Order:

[35] Lory shall pay John $10,000 on account of costs of his motion, payable within 30 days.

[36] Lory and Glacier, jointly and severally, shall pay John $5,500 on account of costs of their unsuccessful motion, payable within 30 days.

[37] As an aside, I indicated in my original decision that each party may wish to take a hard look at the positions they are advancing in this litigation. At this point it is likely that the sibling relationship between Lory and John is irreparably damaged. This litigation has cost both parties dearly in terms of their relationship with each other and legal fees. It is not too late to try to resolve some or all of the issues to minimize the ongoing legal fees, and ETDL fees, that could ultimately serve to negate the amount the parties are arguing over. If it will help the parties move forward, and only if both parties agree, I am willing to conduct a case conference to discuss my preliminary thoughts on some of the issues in an effort to try to facilitate a resolution, without prejudice to the ability of the parties to have a fulsome pre-trial before another judge if they are unable to resolve matters. Whether it is with, or without judicial assistance, the parties need to narrow the issues they are arguing over. If counsel feel it will be of assistance, they may arrange a one-hour appointment before me. Due to the scarcity of available dates in 2023, the appointment will need to be at 4 p.m. or later. The conference may be an informal discussion about some of the main themes and claims in the litigation based on the materials already before me, supplemented by a brief update if the parties wish (although the latter is not required). The intention of this conference is not to case manage the matter, but rather provide some thoughts and opinions on the main claims. I leave it to the parties to decide whether this will be of any assistance to them.

“Original signed by” The Honourable Justice T.J. Nieckarz, Acting R.S.J.

Released: July 4, 2023