Court File and Parties

COURT FILE NO.: CV-23-92470-ES DATE: 2023/09/12

SUPERIOR COURT OF JUSTICE – ONTARIO

In the matter of the Estate of Rosemarie Mikolajewski, deceased

RE: Ingrid Taetz, Applicant AND Kurt Mikolajewski, in his personal capacity and his capacities as Power of Attorney for Property for Rosemarie Mikolajewski and as Estate Trustee for the estate of Rosemarie Mikolajewski, Respondent

BEFORE: Justice A. Doyle

COUNSEL: Ken Dunham, Counsel for the Applicant Lucas Ostrowski, Counsel for the Respondent

HEARD: In Writing

COSTS ENDORSEMENT

[1] On August 14, 2023, the Court made the following order:

1. The respondent, Kurt Mikolajeski, (Kurt) was removed as Estate Trustee and he was to return his Certificate of Appointment to the court registrar forthwith;
2. Ingrid Taetz (Ingrid) was appointed as succeeding estate trustee and was not required to post security;
3. Kurt was to transfer all records and property belonging to the estate to the counsel for Ingrid along with the keys to the home of the deceased located at 157 Anna Avenue (the home) and
4. Kurt was to bring an application to pass the accounts as Rosemarie’s estate trustee within 45 days.

[2] If the parties were unable to resolve the issue of costs, they were to provide written submissions.

[3] Having considered the costs submissions, offers to settle, bills of costs and the Rules of Civil Procedure, this court awards the amount of $9745 to the applicant ½ payable by the estate and the other ½ payable by Kurt.

Background

[4] Rosemarie Mikolajewski (Rosemarie) passed away on February 5, 2022. She had two children, Ingrid and Kurt.

[5] In her will dated April 20, 2017, Rosemarie bequeathed her home, municipally known as 157 Anna Avenue, Ottawa, ON (home), and all its contents to Ingrid. Kurt and Ingrid were to equally share the residue of the estate. Kurt was named Estate Trustee and had previously been appointed as Rosemarie’s Power of Attorney (POA) for both Property and Personal Care.

[6] Kurt and Ingrid are estranged, and Ingrid only learned of her mother’s passing from her aunt one week after her death.

[7] Kurt only provided meaningful information regarding the administration of the Estate after the issuance of this application.

[8] At para. 29 of its decision the court found:

Kurt has demonstrated that the animosity he and his sister have for each other has gotten in the way of acting properly as an estate trustee. He has not been honest and forthright in his handling of his mother’s estate with the other beneficiary. His continued lack of candour and forthrightness is manifested by telling his lawyer the day before the motion of income he has received and pocketed from the estate. The court is not confident that he will act in the best interests of the estate in the future.

Ingrid’s position on costs

[9] The applicant is seeking costs in the amount of $9745 on a full indemnity basis payable by Kurt personally. The amount is less than the amount of $14,000 claimed by Kurt in his original costs’ submissions filed immediately after the hearing.

[10] Ingrid was the successful party. The Court should also consider Kurt’s actions in his role as his mother’s Estate Trustee.

[11] The litigation was required due to the Kurt’s refusal to provide relevant information regarding the administration of his mother’s affairs to the other beneficiary of the will, his sister Ingrid.

[12] After the institution of litigation up until hearing date, Ingrid became aware of Kurt’s tardiness in filing the estate’s income tax returns, debts owed by the estate, and that Kurt had been renting out part of the home.

[13] Kurt was unreasonable and completely breached his fiduciary obligations to Ingrid.

[14] Only late in the day, did he agree that he should reimburse the estate the amount of $2454 that was in the joint account. He also admitted to renting a room out in the home of the deceased and pocketing the rental income.

Kurt’s position

[15] Kurt submits that the majority of the information sought by Ingrid was satisfied before the hearing.

[16] Most of the information including at statement of assets and the records and status of payments on the home of the deceased had been provided and was included in the applicant’s supplementary record.

[17] Ingrid was not successful in obtaining the passing of the accounts while Kurt was the power of attorney and no order was made for a reimbursement of rent to Ingrid.

[18] The affidavit of Ms. Rahman added nothing to the proceedings as it included exchanges between counsel including settlement discussions.

[19] When counsel became aware of other information including the rental of part of the deceased’s premises, he immediately notified Ingrid’s counsel.

[20] He also argues that success was divided and costs should not be awarded. Ingrid was not successful in obtaining all the relief sought including a transfer of the home of the deceased to Ingrid.

[21] She was only able to obtain 2 out of the 8 grounds of relief and three had been satisfied before the application was commenced. Of the three remaining claimed, one was adjourned, one was denied, and one was abandoned by the applicant.

[22] In any event there is nothing that rises to the imposition of costs on a full indemnity basis as Kurt’s conduct was not egregious.

[23] Costs should be borne by the Estate. Kurt was not familiar with his duties as an estate trustee. The Court made the order to protect the assets of the Estate rather than to punish Kurt.

Legal Principles

[24] Awarding the costs of a proceeding are at the discretion of the Court (s. 131(1) Courts of Justice Act). That discretion must be exercised on a principled basis (Davies v. Clarington Municipality, 2009 ONCA 722, 100 O.R. (3d) 66, at para. 40). Fixing costs is not merely a mechanical exercise; the amount awarded should, considering all the circumstances, be fair and reasonable (Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.)). In a proper case, costs may be awarded against a successful party (r. 57.01 (2) of the Rules of Civil Procedures, R.R.O. 1990, Reg. 194, (“Rules”)).

[25] As stated in Boucher, the Court must be fair and reasonable when exercising its discretion to award costs and the parties’ expectation concerning the amount of a costs award is a relevant factor to be considered.

[26] Rule 57.01(1) of the Rules contains a non-exhaustive checklist of factors that guide the Court in its reasoning when awarding costs in the exercise of its discretion under s. 131 of the Courts of Justice Act.

[27] In Brown v. Rigsby 2016 ONCA 521, the court dealt with the issue of estate costs:

[11] Estate trustees are entitled to be indemnified for all reasonably incurred costs in the administration of an estate. This includes the legal costs of an action reasonably defended, to the extent these costs are not recovered from another person. However, a court may order otherwise if an estate trustee has acted unreasonably or in substance for his or her own benefit, rather than for the benefit of the estate: Geffen v. Goodman Estate, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353, at 391. The principles described in Geffen were not displaced by this court’s decision in McDougald Estate.

[13] Most recently, in Neuberger Estate v. York, 2016 ONCA 303, [2016] O.J. No. 2151, Gillese J.A. addressed the costs of parties engaged in estates litigation. At paras. 24 and 25, she wrote:

In estates litigation in Ontario, the historical approach to costs has been displaced in favour of one in which the costs rules in civil litigation apply both at first instance and on appeal, unless the court finds that one or more of the relevant public policy considerations dictate that costs (or some portion thereof) should be paid out of the assets of the estate: McDougald Estate v. Gooderham (2005), 2005 CanLII 21091 (ON CA), 255 D.L.R. (4th) 435 (Ont. C.A.), at para. 80; see also Sawdon Estate v. Sawdon, 2014 ONCA 101, 370 D.L.R. (4th) 686, at para. 101. The public policy considerations at play in estate litigation are primarily of two sorts: (1) where the difficulties or ambiguities that give rise to the litigation are caused, in whole or in part, by the testator; and (2) the need to ensure that estates are properly administered.

Blended costs awards, in which a portion of costs is payable by the losing party and the balance is payable out of the estate, are available at first instance and on appeal, in the discretion of the court, where one or more of the relevant public policy considerations are found to be engaged: Sawdon, at paras. 93-100 and 107.

[14] In summary, subject to the discretion of the court, the general rules governing an estate trustee’s ability to recover legal costs from an estate are as follows:

• an estate trustee is entitled to indemnification from the estate for all reasonably incurred legal costs;
• if an estate trustee acts unreasonably or in his or her own self-interest, he or she is not entitled to indemnification from the estate; and
• if an estate trustee recovers a portion of his or her costs from another person or party, he or she is entitled to indemnification from the estate for the remaining reasonably incurred costs.

Analysis

[28] Ingrid was successful on the main issues before the Court, that is, the removal of Kurt as an estate trustee and transfer of the administration of the Estate to Ingrid.

[29] On August 8 2023, a letter was forwarded to the defendant’s counsel with an offer to resolve matters.

[30] The terms of the offers were as not as favorable as this court’s decision as the Court adjourned the issue the requirement of the passing of accounts while Kurt was a power of attorney for the deceased and the transfer of the home.

[31] The Court did not grant the order of the immediate transfer of the home to Ingrid.

[32] Given the paucity of evidence, the issue of the passing of the accounts for the period before her death was adjourned.

[33] However, this application was necessary as a result of Kurt’s refusal to be transparent and provide information sought by Ingrid that she was entitled to.

[34] The Court finds that the cost of the litigation of $9745 as outlined in the bill of costs is reasonable and could be expected to be paid by the unsuccessful litigant especially considering Kurt’s filed bill of costs was approximately $14,000

[35] The issues were important, but the matter was not complex.

[36] The next issue is whether costs should be awarded on a partial, substantial or full indemnity basis.

[37] The court made the following findings in its decision:

• Kurt was not forthcoming with information that Ingrid was entitled to; and
• He provided most of the information after the application was issued and some on the morning of the hearing;

[38] Therefore, there was late disclosure of material information.

[39] Kurt conceded at the last minute that he had improperly retained approximately $2500 from the joint account and there are some contradictions in his claim to the estate regarding roof repairs.

[40] Kurt argues that his conduct is as a result of ignorance rather than bad faith.

[41] Costs should be awarded on a full indemnity basis as Ingrid, as a beneficiary, should not have had to bring this application. I find that Kurt had acted unreasonably.

[42] As a result, given the bill of costs and time spent to proceed to this application, I find a fair and reasonable and proportionate amount of costs is $9745.

[43] Given the above findings, ½ of the amount will be paid by the estate and the other ½ is payable by Kurt.

Justice A. Doyle

Released: September 12, 2023

COURT FILE NO.: CV-23-92470-ES DATE: 2023/09/12

ONTARIO SUPERIOR COURT OF JUSTICE

RE: Ingrid Taetz, Applicant AND Kurt Mikolajewski, in his personal capacity and his capacities as Power of Attorney for Property for Rosemarie Mikolajewski and as Estate Trustee for the estate of Rosemarie Mikolajewski, Respondent

BEFORE: Justice A. Doyle

COUNSEL: Ken Dunham, Counsel for the Applicant Lucas Ostrowski, Counsel for the Respondent

ENDORSEMENT

Justice A. Doyle

Released: September 12, 2023