Court File and Parties
Court File No.: CV-22-1009 Date: 2024-01-31 Superior Court of Justice - Ontario
Re: In the Guardianship of Anasia Peltier, an incapable adult
Before: Heeney J.
Counsel: Justin Newman, counsel, for the moving party Brenda Myers; Kimberly Cura, counsel, for the responding party Tereasa Muscedere; Adam Giancola, counsel, for the Office of the Public Guardian and Trustee; John Morrissey, s. 3 counsel for Anasia Peltier
Heard: December 15, 2023 by videoconference; decision released December 19, 2023; written submissions on costs completed January 23, 2024
Endorsement
[1] I have now received and reviewed the submissions of all counsel as to costs.
[2] This was an application by Brenda Myers (“Brenda”) for appointment as the interim guardian of property for Anasia Peltier (“Anasia”). Brenda is the great-aunt of Anasia. It was brought pursuant to s. 42(8)(c) of the Substitute Decisions Act, S.O. 1992, c. 30 (the “SDA”).
[3] The application was opposed by Anasia’s mother, Tereasa Muscedere (“Tereasa”), who had previously been appointed as Anasia’s guardian of property while Anasia was a minor and continued to act as de facto guardian of property thereafter. Her application to pass accounts is pending, and many significant objections have been raised as to Tereasa’s management of Anasia’s property and income.
[4] The application by Brenda was wholly successful. In my endorsement of Dec. 19, 2023, I found that Tereasa’s opposition to the application arose out of her hostility and resentment toward Brenda at having been replaced by her as Anasia’s de facto guardian. Her opposition also ran contrary to Anasia’s clearly expressed wishes, which played a significant factor in the success of the application. I find that Tereasa’s opposition was unreasonable. This matter should have proceeded on consent, since it was obvious that it was in Anasia’s best interests that Brenda be appointed.
[5] Brenda claims costs in the total amount of $37,945.12, which represents full indemnity. She asks that Anasia pay $10,000 of that, since that approximates what her legal fees would have been had the matter proceeded on consent. She asks that Tereasa be ordered to pay the balance of $27,945.12, as the unsuccessful party on the motion.
[6] Mr. Giancola, agent lawyer for the PGT, asks for an order that his full indemnity costs of $2,311.42, be paid out of Anasia’s property, but that a further order be made that Tereasa reimburse Anasia for the PGT’s partial indemnity costs of $1,386.85.
[7] Mr. Morrissey, s. 3 counsel for Anasia, seeks costs against Tereasa on a full indemnity basis in the amount of $8,872.20.
[8] Tereasa asks that no costs be awarded against her, or that the amounts be significantly reduced. She claims that she is impecunious and unable to afford to pay the costs that are demanded. She also argues that the costs claimed are excessive.
Applicable Principles
[9] In Fiacco v. Lombardi, 2009 ONSC 4509, at paras. 31-36, D. M. Brown J., as he then was, outlined the principles applicable to costs in litigation of this kind:
The SDA does not deal specifically with the costs of guardianship applications or subsequent motions for directions. Section 131 of the Courts of Justice Act and Rule 57 of the Rules of Civil Procedure therefore govern.
In Salter v. Salter Estate I wrote about cost claims in litigation involving the estates of deceased persons:
One final point. In his written submissions counsel for Ms. Salter argued that “as a matter of principle and practice the costs of contentious estate matters are generally paid from the estate itself.” With respect, that is not a correct statement of the law. As the Court of Appeal made clear in McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 (Ont. C.A.), estate litigation, like any other form of civil litigation, operates subject to the general civil litigation costs regime established by section 131 of the Courts of Justice Act and Rule 57 of the Rules of Civil Procedure, except in a limited number of circumstances where public policy considerations permit the costs of all parties to be ordered paid out of the estate. Those limited circumstances exist where the litigation arose as a result of the actions of the testator or those with an interest in the residue of the estate, or where the litigation was reasonably necessary to ensure the proper administration of the estate: McDougald Estate, paras. 78 to 80.
From a year of acting as administrative judge for the Toronto Region Estates List I have concluded that the message and implications of the McDougald Estate case are not yet fully appreciated. A view persists that estates litigation stands separate and apart from the general civil litigation regime. It does not; estates litigation is a sub-set of civil litigation. 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.
Those comments apply with equal force to capacity litigation involving incapable persons, with some modification to fit the particularities of guardianship applications.
The exercise of the court’s discretion in respect of cost claims in capacity litigation should reflect the basic purpose of the SDA - to protect the property of a person found to be incapable and to ensure that such property is managed wisely so that it provides a stream of income to support the needs of the incapable person: SDA, sections 32(1) and 37. To that end, when faced with a cost claim against the estate of an incapable person, a court must examine what, if any, benefit the incapable person derived from the legal work which generated those costs.
Broadly speaking, applications for the appointment of a guardian arise in two circumstances: (i) the incapable person did not execute a continuing power of attorney, so no person exists to manage her property during her incapacity, or (ii) difficulties exist regarding the exercise of an existing power of attorney - e.g. conflict amongst the attorneys, as in the present case - so a guardian is required to clarify the situation and to regularize the management of the property of the incapable person. If an application to appoint succeeds, then it is the job of the court to assess what costs of the application benefited the incapable person.
Most applications are unopposed. If the court appoints a guardian of property, then the incapable person has received a benefit because her property will now be managed for her benefit. In such cases it will be up to the court to consider the reasonableness of the costs claimed against the estate of the incapable person.
Contested guardianship applications are more problematic. While bona fide disputes may exist amongst those interested in the well-being of the incapable person as to who should be appointed her guardian, a significant risk exists that a contested guardianship application may lose sight of its purpose - to benefit the incapable person - and degenerate into a battle amongst siblings or other family members, some of whom may have only their own interests at heart. In such circumstances courts must scrutinize rigorously claims of costs made against the estate of the incapable person to ensure that they are justified by reference to the best interests of the incapable person.
[10] The “blended” costs order sought by most of the parties, where part of the costs are payable from Anasia’s property and part are payable by the losing party according to the usual rules governing civil litigation, was expressly approved by the Court of Appeal in Sawdon Estate v. Sawdon, 2014 ONCA 101 at paras. 93-97.
[11] Gillese J.A., speaking for the court in Sawdon at para. 82, also outlined the principle that estate trustees are entitled to be indemnified for all reasonably incurred costs, so that any costs not recovered from another party should be paid from the estate:
In Geffen v. Goodman Estate, [1991] 2 S.C.R. 353, [1991] S.C.J. No. 53, at pp. 390-91 S.C.R., Wilson J., writing for the court on this issue, reiterated the long-standing principle that estate trustees are entitled to be indemnified for all reasonably incurred costs, including legal costs. She quoted with approval the following statement from Dallaway (Re), [1982] 3 All E.R. 118, [1982] 1 W.L.R. 756 (Ch. Div.), at p. 122 All E.R.:
In so far as [an estate trustee] does not recover his costs from any other person, he is entitled to take his costs out of the fund held by him unless the court otherwise orders; and the court can otherwise order only on the ground that he has acted unreasonably, or in substance for his own benefit, rather than for the benefit of the fund.
Brenda’s Costs
[12] I will deal with Brenda’s costs claim first. She is the successful moving party, and on the “loser pays” principle, she should be awarded her costs against the unsuccessful opposing party, Tereasa. Tereasa offers no argument that Brenda has done anything that would disentitle her to an award of costs. As already noted, the two points that Tereasa makes are that she does not have the financial resources to pay an award of costs, and that the costs claimed are excessive.
[13] The bulk of the time incurred on the file, 49.8 hours, was spent by Jessica Williams, a 2015 call. Her hourly rate is $375. Justin Newman, also a 2015 call, spent 34.5 hours, at $315 per hour. Danielle Simard, a 2023 call, spent 4.5 hours, at $225 per hour. The rest of the time, which was not significant, was spent by an articling student and two law clerks. The hourly rates are reasonable for this jurisdiction.
[14] Counsel for Brenda acknowledge that the costs incurred are higher than a standard motion but argue that extra work was involved that resulted in the time expended being higher than normal. Those factors included the following:
- Many weeks were spent in negotiation with Scotiatrust to have them named as interim guardian along with Brenda. They ultimately declined to become involved due to the liability risk created by the fact that Tereasa was living in Anasia’s real property and had practical control over it;
- A Management Plan needed to be prepared;
- A review of the Application to Pass accounts was necessary, so as to outline to the court Brenda’s concerns over Tereasa’s prior management;
- Time was spent attempting to arrange a bond;
- A Factum was prepared;
- Tereasa’s materials were served a day before the hearing, resulting in a time crunch to prepare a response.
[15] Tereasa argues that much of the material used by Brenda on the motion was repurposed from the application she brought to be appointed as Anasia’s permanent guardian for property under London court file CV 23-1463, including her affidavit, Management Plan, and exhibits. It is also argued that counsel had already reviewed Tereasa’s accounts for purposes of that competing guardianship application.
[16] In reply, counsel for Brenda points out that Tereasa’s claim that the costs claimed are excessive is difficult to assess, since she has not filed her own Bill of Costs, which would have demonstrated her reasonable expectations. In the absence of that Bill of Costs, the court is entitled to assume that the costs of the unsuccessful party are the same as the costs of the successful party: Re Estate of Ruth Smith, 2011 ONCA 491 at para. 51.
[17] As to Tereasa’s claim of impecuniosity, she provides no evidence to support it. Evidence that the party does not currently possess the financial means to pay an award of costs, and is unlikely to ever acquire that ability, is generally required where such a claim is made: Nassab v. ErinoakKids, 2017 ONSC 2740 at para. 35 (Div. Ct.). Apart from stating that she is a single mother who has devoted the last 18 years of her life to the care of her incapable child, Tereasa provides no evidence of her current, past, or anticipated future income, or her net worth, to support a claim that she cannot afford to pay a costs award. I therefore give this argument no weight.
[18] In my view, Brenda should not be out of pocket in any amount for bringing this motion. It is laudable that she came forward to help Anasia in her time of need. I agree with counsel’s submissions that the current system of court-appointed guardians requires responsible individuals to come forward and volunteer to take on this responsibility. It would be a strong disincentive for people to do so if they were to face a personal burden in costs as a result of participating in the necessary litigation.
[19] There is no question that Anasia benefitted greatly from Brenda’s intervention, and that the motion was of the utmost importance to her. Her structured settlement payments of $5,500 per month had been suspended since October 2023 because there was no court-appointed guardian, and something had to be done immediately to get that much-needed money flowing. While Tereasa’s accounts have not yet been reviewed by the court, there is significant prima facie evidence of mismanagement, such that appointing Tereasa as interim guardian would not have been in Anasia’s best interests, nor would it have been in accord with her wishes. Thus, Brenda did what needed to be done, and she should be awarded full reimbursement for her costs of $37,945.12.
[20] However, that does not mean that Tereasa must necessarily pay the bulk of those costs. While her opposition to this application was unreasonable, I am not satisfied that her conduct in this litigation was egregious or reprehensible, where an award of full indemnity costs would have been warranted. She should, however, be liable for partial indemnity costs.
[21] The Bill of Costs submitted by Brenda’s counsel claimed full indemnity costs of $37,945.12 as already noted, but also calculated partial indemnity costs to be $24,664.33. While receiving a Bill of Costs from Tereasa’s counsel would have been helpful, I am able to state that the amounts claimed are well above those normally incurred on a motion in this jurisdiction, even where Factums are filed and cross-examinations are conducted, which they were not in this case. In my view, some reduction is on order.
[22] Ultimately, the court must make an award of costs that is fair and reasonable.
[23] An order will go that Tereasa will pay Brenda’s costs on a partial indemnity basis, fixed at $20,000. Brenda will also be entitled to recover the balance of her actual legal costs, in the amount of $17,945.12, from Anasia, in accordance with the principles outlined in Sawdon Estate, above.
Costs of the PGT
[24] As already noted, the PGT asks for an order that it recover costs, on a full indemnity basis, from Anasia, in the amount of $2,311.42, but that the court order Tereasa to reimburse Anasia for the partial indemnity portion of those costs in the amount of $1,386.85.
[25] The PGT became a party in this proceeding when it was served with Tereasa’s application to pass accounts. Pursuant to r. 7.04 of the Rules of Civil Procedure, the PGT is the litigation guardian of last resort. As no other person was initially willing to act as Anasia’s litigation guardian, the PGT agreed to do so, they reviewed Tereasa’s accounts, and delivered objections. The PGT is entitled, on a passing of accounts, to request that its costs be paid out of the property of the incapable person, pursuant to r. 74.18 and Tariff C.
[26] While the PGT did review Brenda’s motion for interim guardianship, provide comments to counsel, attend the hearing, and make submissions, I am not persuaded that they can accurately be characterized as a “successful party” who should be entitled to an award of costs as against the unsuccessful party. Their position on the motion was that they “did not oppose” Brenda’s motion, which is essentially a neutral position. I agree with counsel for Tereasa that this is a position that could have been communicated by way of a letter filed with the court, as is customary in many similar cases.
[27] I am also concerned that most of the costs incurred by the PGT may well be related to the passing of accounts, as opposed to the motion for appointment of an interim guardian of property, since their objection to the accounts was the focus of counsel’s submissions. The hearing of that application has yet to occur. In my view, the claim for partial indemnity costs that the PGT makes is best left to be dealt with by the judge who hears the passing of accounts.
[28] In the meantime, the PGT is clearly entitled to an award of its full indemnity costs payable by Anasia.
[29] An order will go as follows:
- The PGT shall recover its costs of $2,311.42 on a full indemnity basis from Anasia;
- Its request that Tereasa should be ordered to reimburse Anasia for the partial indemnity portion of those costs, in the amount of $1,386.85, is adjourned to the judge dealing with Tereasa’s passing of accounts.
Costs of Section 3 Counsel
[30] Section 3 counsel, Mr. Morrissey, was engaged to represent the interests of Anasia. He made a valuable contribution to these proceedings, and his letter and submissions were of great assistance to the court.
[31] In his submissions, he emphasized that the appointment of an interim guardian of property was entirely necessary in the circumstances; that the matter was of great importance to Anasia, given that she had been without a court-appointed guardian for two years, during which Tereasa managed Anasia’s property without legal authority to do so; that Tereasa had continued to collect Anasia’s structured settlement payments of $5,500 per month after Anasia moved out, and neither forwarded that money to Anasia nor did she offer to pay any of Anasia’s living expenses; that Tereasa was entirely lacking in transparency and cooperation, which necessitated the motion; that Anasia was in dire need of her monthly payments, which had been suspended due to the lack of an guardian of property; that, in a letter to Tereasa’s counsel dated December 4, 2023, he clearly outlined Anasia’s position, and urged Tereasa not to oppose the motion; and, that the matter should have proceeded on consent, which would have resulted in costs being a fraction of what they ended up being.
[32] He asks the court to award full indemnity costs of $8,872.20, payable by Tereasa, or on such other scale as the court deems just.
[33] Tereasa argues that Anasia would have incurred some costs for s. 3 counsel notwithstanding her objection to the motion, such that it is unfair for her to be ordered to pay full indemnity costs.
[34] Once again, I am of the view that Tereasa’s objection to the motion, while unreasonable, does not rise to the “egregious” level that would justify full indemnity costs. I agree that Anasia would have required the services of s. 3 counsel in any event and would have incurred some legal costs as a result.
[35] I do consider s. 3 counsel, to be a “successful party” in this motion, because his position, on behalf of Anasia, was clear that Brenda should be appointed as interim guardian, and that position prevailed. I find that he is entitled to an award of costs on the usual partial indemnity basis.
[36] I have reviewed his Bill of Costs and find it to be reasonable. An order will go that Tereasa pay the costs of s. 3 counsel on a partial indemnity basis in the amount of $5,766.93.
[37] However, his full indemnity costs are $8,872.20. Public policy demands that lawyers who agree to be appointed as s. 3 counsel should generally recover their full costs: see Adam v. Adam, 2023 ONSC 3093 at para. 54. Thus, an order will go that the balance of his costs in the amount of $3,105.27 be paid by Anasia.
[38] The blended costs orders I have made with respect to Brenda and s. 3 counsel may give rise to difficulties in collection, with respect to the portion of each order that is payable by Tereasa. I have already stressed that neither the newly appointed interim guardian of property, Brenda, nor s. 3 counsel, should be out of pocket in any respect as a result of this litigation. Thus, the costs ordered to be paid by Tereasa in each case shall initially be paid by Anasia, and she shall be reimbursed when payment is received from Tereasa.
Mr. Justice T. A. Heeney
Date: January 31, 2024