Court File and Parties

COURT FILE NO.: CV-23-00000265-0000 DATE: 2024-04-30 SUPERIOR COURT OF JUSTICE – ONTARIO 10 Louisa Street, Orangeville ON L9W 3P9

RE: Denise Pettipas, Applicant AND: Eileen Bessie Pettipas and Deborah Johnston (nee Pettipas) personally and in her capacity as the Power of Attorney for Eileen Bessie Pettipas, and The Office of the Public Guardian and Trustee and Legal Services, Respondents

BEFORE: Justice M. Kurz

COUNSEL: Ioulia Vinogradova, for the Applicant – ioulia@hummingbirdlaw.com Deborah Johnson (nee Pettipas), Respondent self-represented deborahj570@gmail.com Office of the Public Guardian and Trustee, Respondent – Pgt-legal-documents@ontario.ca (not present)

HEARD: January 8, 2024, in person

COSTS ENDORSEMENT

[1] In my endorsement on this application on January 31, 2024: 2024 ONSC 667, the Applicant, Denise Pettipas (“Denise”) was the successful party. She obtained an order for the removal of the Respondent, Deborah Johnston (“Deborah”), as power of attorney over personal care and property for their elderly and infirm mother, Eileen Bessie Pettipas (“Eileen”). She was also successful in obtaining an order appointing herself as guardian of both property and personal care for Eileen. However, I adjourned her motion to have Deborah found in contempt, sine die (to another date).

[2] Denise now seeks her full indemnity costs of this application of $31,684.38. In the alternative, she seeks substantial indemnity costs of $25,341.50 or partial indemnity costs of $20,594.85.

[3] Deborah has not responded to the costs submissions of Denise despite my unilaterally offering her a seven-day extension of the time to file her submissions on April 2, 2024. She is approximately six weeks late in filing those submissions. I now assume that she does not intend to do so.

Applicable Authorities Regarding Costs

[4] The jurisdiction to grant costs of a proceeding arises from s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43, which reads as follows:

131 (1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

[5] The factors that a court determining costs must consider are set out in Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which reads as follows:

Factors in Discretion

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;

(a) 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.

[6] In Corsi Sr. v. Fogler, Rubinoff LLP, 2011 ONSC 993, at para. 9, Himel J. offers a helpful summary of the principles that apply to the determination of costs. She writes:

9 Generally, costs follow the event and the successful party is entitled to its costs incurred in bringing or defending the action: see Bell Canada v. Olympia and York Developments Ltd. (1994), 17 O.R. (3d) 135 (C.A.). The fixing of costs is not a mechanical exercise based solely upon a calculation of hours and rates. It involves a consideration of a number of factors set out in Rule 57.01 to determine what is appropriate in the circumstances. The objective is to fix costs in an amount that the court considers as fair and reasonable for the unsuccessful party to pay in a particular proceeding rather than what the actual costs were of the successful litigant: see Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.); Zesta Engineering v. Cloutier (2002), 164 O.A.C. 234 (C.A.); Moon v. Sher (2004), 246 D.L.R. (4th) 440 (C.A.).

[7] In the unreported case of T.B. v. Halton Regional Police Service, Milton S.C.J. file No. 1730/15, December 2, 2019 at para. 3, Fitzpatrick J. offers the following additional consideration regarding the costs of a civil proceeding:

… the mechanical mathematics of multiplying rates by hours is not sufficient. Reasonableness must be the overriding directive and inform all costs awards. Reasonableness must consider proportionality and, of course, must be assessed in the context of the nature of the proceeding, the character and magnitude of the dispute, the complexity of the factual and legal issues and any other fundamental factors the Court may be directed to when performing a meaningful costs analysis.

[8] In Corsi Sr., above, at paras. 10-11, Himel J. added the following summary of the principles that apply to the determination of the appropriate scale of costs:

10 In determining the appropriate scale of costs to be awarded, the partial indemnity scale is intended to provide indemnification for costs reasonably incurred in the course of the action. In the usual circumstances, an award of costs on a partial indemnity basis is the appropriate award to impose on the unsuccessful party: see Foulis v. Robinson (1978), 21 O.R. (2d) 769 (C.A.); Mortimer v. Cameron (1994), 17 O.R. (3d) 1 (C.A.). In Wasserman, Arsenault Ltd. v. Sone (2002), 164 O.A.C. 195 (C.A.) at para. 4, the court wrote that "partial indemnity means just that -- indemnification for only a part, or a proportion, of the expense of the litigation."

11 Costs on a substantial indemnity scale are usually reserved for those "rare and exceptional" cases, where the conduct of the party against whom costs is ordered may be considered reprehensible or where there are other special circumstances such as an offer to settle within the meaning of Rule 49.10 that justify costs on the higher scale. An award of costs on a substantial indemnity scale is reserved for special and rare circumstances: see McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 59 O.R. (3d) 97 (C.A.).

[9] In Davies v. Clarington, 2009 ONCA 722, Epstein J.A., writing for the Ontario Court of Appeal, confirmed at para. 28 the principle "... 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." The conduct that the court referred to was "reprehensible" or amounting to an abuse of process.

[10] In McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 59 O.R. (3d) 97 (C.A.) Abella J.A., as she then was, clarified on behalf of the Ontario Court of Appeal that egregious behaviour, whether causing the litigation and/or during the course of litigation, can be the foundation of an order of substantial indemnity costs.

[11] In Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101, Gillese J.A cited at para. 82 “the long-standing principle that estate trustees are entitled to be indemnified for all reasonably incurred costs, including legal costs.” However, as she pointed out at para. 84, the traditional rule by which all costs are paid out of an estate has been supplanted by the ordinary costs rules in civil litigation. As Gillese J.A wrote:

That is, the starting point is that estate litigation, like any other form of civil litigation, operates subject to the general civil litigation costs regime established by s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, except in those limited circumstances where public policy considerations apply.

[12] That is because of the risk that litigants, unconstrained by the discipline of costs orders, may litigate with impunity, feeling all costs will simply be paid by a diminishing estate.

[13] Those public policy considerations in estate litigation to which Gillese J.A. alluded are: (1) the need to give effect to valid wills that reflect the intention of competent testators; and (2) the need to ensure that estates are properly administered: at para. 85.

[14] In Arvanitis v. Levers, 2017 ONSC 3758 (“Arvanitis”), Price J. wrote at para. 82 that those principles “apply equally” to proceedings under the Substitute Decisions Act, 1992, S.O. 1992, C. 30 ("SDA"). Price J. further alluded to the following general principles which apply to costs in civil proceedings:

In [SDA] proceedings, the public policy objectives that must be balanced against the purposes of costs orders generally are to give effect to the intentions of persons, when competent, to name those who, in the event of future incapacity, are to be entrusted with their personal care and property, and to ensure that those they choose as their attorneys for property administer their estates properly.

[15] At para. 98, Price J. pointed to the policy consideration that the grantor of a power of attorney should not be required to shoulder the unnecessary legal costs which may arise if a named attorney fails to perform their duties, making the attorney arrangement “untenable”.

[16] In Rudin-Brown v. Brown 2021 ONSC 6313, H.J. Williams J. adopted the comments of Price J. in Arvanitis and concluded at para. 22:

22 It can no longer be said in estate matters, including matters under the SDA, that parties and their counsel can reasonably expect all of their costs to be paid for by the assets of the testator or incapable person. "The trend for some time now has to examine the nature of the dispute and the conduct of the parties. Although in most cases it is also possible to consider which party is the "successful" party, that is not as significant a factor in these types of cases provided it can be said that the parties are properly motivated by the best interests of the person under a disability and are acting reasonably." (Arvanitis, at para. 94, citing Ziskos v. Miksche, at para. 56.)

[17] In Arvanitis, Price J. ordered the unsuccessful party to pay the successful party’s full indemnity costs because of unreasonable conduct. He found at para. 109 that the SDA proceeding was “a costly and time consuming exercise which, ultimately, proved unnecessary”. He did not explain why he chose the full as opposed to substantial indemnity scale of costs.

[18] In Rudin-Brown v. Brown, H.J. Williams J. ordered the unsuccessful party to pay substantial indemnity costs to the successful parties. He found that that the losing party had exerted undue influence on the grantor. In addition, his conduct had been contrary to the grantor’s best interests for many years and “in several respects he had been motivated by his own self-interest rather than what was best for [the grantor]”. In taping her phone calls, he had “shown a complete disregard for [the grantor’s] interests”: para. 24. On the other hand, the successful parties were “motivated by [the grantor’s] best interests”: para. 26.

Analysis

[19] Denise was the successful party in this matter and presumptively entitled to her costs. Deborah failed to obey the Harris J. disclosure order until the eve of the hearing of this matter. Even then, she only offered partial disclosure. I also determined that Deborah had allowed her son, Steven, to continue to reside in Eileen’s home, rent-free. But Steven had apparently been doing so for quite some time, even when Eileen had capacity. Deborah failed to pay certain bills of Eileen, placing her in financial jeopardy and at risk of losing her placement. But on the evidence before me, I have not found that Deborah personally benefitted from her less-than-ideal performance of her duties.

[20] I also find that the fees charged, and work performed by Applicant’s counsel were reasonable and proportionate in the circumstances. I cannot speak to the reasonable expectations of the self-represented Deborah, who has not offered any costs submissions. But the amount of the fees charged should not be surprising in the circumstances.

[21] The remaining issues are whether the estate should be primarily responsible for Denise’s costs, with the right to seek reimbursement from Deborah or whether Deborah alone should shoulder those fees. In favour of the former is the notion that Denise, acting in good faith and for the benefit of her mother, Eileen, should not have to shoulder costs of this application to protect Eileen’s interests. Inasmuch as Deborah is unlikely to have the funds available to pay those costs at this time, the argument is that Denise should be reimbursed out of the estate of the person whose interests she protected, with the estate having the right to seek reimbursement of those costs from Deborah. Those costs may not be immediately paid, but they may come out of Deborah’s interest in Eileen’s estate after Eileen’s death.

[22] On the other hand, Eileen did nothing wrong and arguably should not be required to pay any costs in this proceeding, even if she is entitled to claim reimbursement. Denise could claim reimbursement out of any bequest that Deborah may receive.

[23] I find that the interest in preserving Eileen’s estate and placement makes this litigation very much in her best interests. Public policy should not punish a well-meaning relative seeking to protect a vulnerable person in reasonable circumstances such as this. I do not wish to discourage the next Denise from stepping up to protect a vulnerable parent, relative or spouse.

[24] With regard to scale of costs, I find that substantial rather than full indemnity is the appropriate scale for the reasons set out above.

[25] Thus, I order that Denise’s substantial indemnity costs of $25,341.50 shall be payable by both Eileen and Deborah. However, Eileen or if applicable, her estate, is entitled to full reimbursement of those costs from Deborah.

Released: April 30, 2024