Court File and Parties
COURT FILE NO.: CV-22-00090067-0000 DATE: 20240925 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Dane Armstrong and Corey Armstrong, Applicants AND Larry Atkinson, in his personal capacity and capacity as Estate Trustee of the Estate of Leslie Pratt Armstrong, Larry Plumb, Judy Lorraine Armstrong, Jacqueline McDonald, and Chantal Bourgon, Respondents
BEFORE: Justice R. Ryan Bell
COUNSEL: John Paul Zubec, for the Applicants David P. Gould, for the Respondent Larry Atkinson
HEARD: September 19, 2024
Costs Endorsement
Background
1The Estate of Leslie Pratt Armstrong, of which the respondent Larry Atkinson is the estate trustee, was assigned into bankruptcy in April 2024; as a result, the proceeding has been stayed. The sole issue to be determined is the applicants’ claim for costs against Mr. Atkinson in his personal capacity.
2The applicants are the only children of the deceased. Their mother, the respondent Judy Armstrong, was married to the deceased until their marriage ended in accordance with a divorce order dated December 9, 2014. The divorce order incorporated the terms of minutes of settlement between the deceased and Ms. Armstrong. The minutes of settlement and the divorce order stipulated that Ms. Armstrong pay the deceased support and that the deceased establish a retirement vehicle to receive the equalization payment. Under the terms of the divorce order, each party was required to designate the children (that is, the applicants), as their beneficiaries to their respective interests in the “pension benefit.” The minutes of settlement expressly state that they are binding on each party and their respective estates. The deceased did not name the applicants as the beneficiaries of his accounts.
3In the application, the applicants sought a declaration that Mr. Atkinson, as estate trustee, was holding certain monies in trust for their benefit, an order that Mr. Atkinson comply with the divorce order and pay those monies to the applicants, and an order that Dane Armstrong be reimbursed for the cremation costs he incurred.
Positions of the Parties
4In support of their claim for costs against Mr. Atkinson in his personal capacity, the applicants argue that the application was only made necessary because of Mr. Atkinson’s conduct: he refused to comply with the terms of the divorce order and the minutes of settlement by turning over the balance of the equalization payment to the applicants. They say that Mr. Atkinson acted in his personal interest – Mr. Atkinson was left $20,000 under the deceased’s will, while each of the applicants was bequeathed $1.00 – and prevented the applicants from recovering the equalization payment so as to ensure there were sufficient assets in the estate to cover his own bequest. The applicants say:
- Mr. Atkinson “defied” a court order (the divorce order);
- Mr. Atkinson “forced” an urgent court appearance because he would not agree to preserve the equalization payment, pending adjudication of the application. Then, at the September 8, 2022 case conference before Gomery J., as she then was, counsel for the estate trustee advised there would be no distribution from the estate pending determination of the issues in the application;
- Mr. Atkinson breached the undertaking to the court to preserve the estate pending adjudication of the application by assigning the estate into bankruptcy;
- Mr. Atkinson waited until the eve of the application hearing to assign the estate into bankruptcy, after the applicants had prepared an application record which included expert evidence and evidence tracing the funds, and after the applicants had reviewed Mr. Atkinson’s 365-page record and factum; and
- Mr. Atkinson obtained the order authorizing him, as estate trustee, to assign the estate into bankruptcy, without notice, and without disclosing to the court the divorce order, the pending application, or the undertaking given to Gomery J., and without explaining why an urgent assignment into bankruptcy was required.
5The applicants have provided two costs outlines: the first, for the entire proceeding, and the second, from December 2023. On December 1, 2023, counsel for the estate trustee (not counsel on the hearing before me), wrote to counsel for the applicants to advise that,
[t]he estate trustee is of the view that if the matter does not resolve now, the Estate will be bankrupt. Accordingly, one final offer is being advanced. If not accepted the estate intends to make an assignment into bankruptcy.
6While the intention to make an assignment in bankruptcy was first raised on December 1, 2023, the order authorizing the estate trustee to file an assignment in bankruptcy was not made until April 3, 2024. The applicants received no response to their requests for information. In the end, they obtained their own copy of the without notice motion record from the court.
7Mr. Atkinson says that he should not be liable for any of the applicants’ costs and seeks his costs of the hearing on a substantial indemnity basis. Mr. Atkinson asserts that “[t]hroughout this dispute, he was pulled in multiple directions by competing obligations, all while the estate’s assets were being depleted by legal costs and the estate was creeping towards insolvency.” He says that he “did his best” in a difficult situation and that he acted on the advice of his previous counsel. The latter, it seems to me, is a matter between Mr. Atkinson and his previous counsel, and not of particular relevance on this costs hearing. In any event, I have no evidence from previous counsel before me.
Analysis
8A court may award costs personally against an estate trustee when the trustee’s conduct is deemed unreasonable or self-serving: see Avdeeva v. Khousehabeh, 2023 ONSC 6402; Moodie v. Toronto Transit Commission (Costs), 2015 ONSC 5927, at paras. 32, 34. I am mindful that the bar for awarding costs personally against an estate trustee is high; courts should not set up disincentives for people to assume the role of estate trustees because of fears they could be personally liable: Avdeeva, at para. 46, citing Penny (Estate of) and de Vries v. Resetar, 2011 ONSC 575, at para. 19; Moodie, at para. 34.
9The applicants say that Mr. Atkinson’s conduct as estate trustee was unreasonable from the beginning. They say the application was only made necessary because he refused to comply with the divorce order and the minutes of settlement (expressly made binding on the estate) by turning over the balance of the equalization payment. An urgent court appearance was required because Mr. Atkinson would not agree to preserve the equalization payment pending adjudication of the application and then, an undertaking to that effect was given at the case conference.
10Mr. Atkinson’s alleged “refusal” to comply with the divorce order and the minutes of settlement go the merits of the application, which were not before me because of the stay of proceedings. Arguably, the same could be said of the necessity of the urgent case conference before Gomery J. These are not matters that would justify an award of costs against Mr. Atkinson personally from the outset of the litigation.
11However, I find that Mr. Atkinson’s conduct as estate trustee from December 2023 onward was sufficiently unreasonable so as to justify an award of costs against him personally. It was unreasonable for Mr. Atkinson to make a “final offer” of settlement, maintain that if that offer was not accepted, the estate intended to make an assignment into bankruptcy, and then not respond to the applicants’ inquiries, and not take further steps regarding the bankruptcy filing for several months. In these circumstances, it was unreasonable for Mr. Atkinson to proceed with his motion without notice to the applicants. Having brought his motion without notice, Mr. Atkinson contravened the requirement that full and fair disclosure be made of all material facts: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 39.01(6). Mr. Atkinson then proceeded to compound his breach by failing to provide a copy of his motion materials to the applicants when asked to do so.
12There is nothing in the record that explains Mr. Atkinson’s decision to wait until the eve of the application hearing to assign the estate into bankruptcy after the applicants had prepared their record, and after they had reviewed Mr. Atkinson’s own lengthy record. In the context of the December 1, 2023 letter that first raised a bankruptcy filing, I can only conclude that Mr. Atkinson’s timing was strategic, with his conduct aimed at increasing the applicants’ costs.
13Finally, while Mr. Atkinson disputes that the assignment of the estate into bankruptcy constituted a breach of the undertaking to the court to preserve the estate pending adjudication of the application, at the very least, the existence of the undertaking ought to have been disclosed on his without notice motion. It was not.
14I find that Mr. Atkinson’s litigation conduct from December 2023 was sufficiently unreasonable that it justifies an award of costs as against him personally. I would not, however, award costs on a substantial indemnity scale. While unreasonable, I would not characterize Mr. Atkinson’s conduct as reprehensible, scandalous, or outrageous, so as to warrant sanction by the court through an award of elevated costs: Davies v. Clarington (Municipality), 2009 ONCA 722, at para. 28. Counsel have confirmed that there are no r. 49 offers to settle impacting the scale of costs.
Quantum of Costs
15The only remaining issue is the quantum of costs. The costs fixed by the court “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”: Boucher v. Public Accountants Council for the Province of Ontario, (2004), 71 O.R. (3d) 291 (Ont. C.A.), at para. 24.
16The applicants seek partial indemnity fees, including HST, of $14,075.18, and disbursements, including HST, of $4,167.44, for a total of $18,242.62. In my view, having regard to the principles enunciated in Boucher, and the factors listed in r. 57.01, I find that the fees and disbursements claimed by the applicants for the period commencing December 1, 2023 are fair, reasonable, and proportionate.
17The hourly rates and time expended on this matter by counsel for the applicants are reasonable. Mr. Atkinson did not challenge either the hourly rates or the time expended and did not provide his own costs outline. I accept that there was an emotional component to the litigation given that the proceeding involved monies transferred from the applicants’ mother to their deceased father. I have already reviewed Mr. Atkinson’s conduct. He elected to assign the estate into bankruptcy on the eve of the hearing, only after considerable fees and disbursements had been incurred.
Disposition
18For these reasons, I award the applicants costs against Mr. Atkinson in his personal capacity in the total amount of $18,242.62, inclusive of disbursements and taxes. This amount is to be paid by Mr. Atkinson to the applicants within 30 days.
Justice R. Ryan Bell Date: September 25, 2024
COURT FILE NO.: CV-22-0090067-0000 DATE: 20240925 ONTARIO SUPERIOR COURT OF JUSTICE RE: Dane Armstrong and Corey Armstrong (Applicants) AND Larry Atkinson, in his personal capacity and capacity as Estate Trustee of the Estate of Leslie Pratt Armstrong, Larry Plumb, Judy Lorraine Armstrong, Jacqueline McDonald, and Chantal Bourgon, (Respondents) COUNSEL: John Paul Zubec, for the Applicants David P Gould, for the Respondent Larry Atkinson costs ENDORSEMENT
Justice Ryan Bell Released: September 25, 2024